tv Bloomberg Daybreak Australia Bloomberg June 8, 2017 6:00pm-7:01pm EDT
♪ it is 11:00 p.m. in the united kingdom, where it is pointing to a new day of uncertainty. asia waking up to the news of the polls are pointing to a potentially hung parliament in the united kingdom. the exit polls suggest theresa may will claim the most seats in the u.k. parliament, but will crucially ball short of a majority. sterling is falling.
let's start with the conservatives, fall seats from an over rolled majority. the pound touching at lowest level since april. those were lies, plain and simple. meanwhile, the former fbi director says president trump lied. accuses the white house of defaming him and the bureau. says japan has escaped inflation but still has a long way to go. i am live from sydney, where is just after it :00 a.m. -- 8:00. we continue our coverage of the election and the countdown to asia's first major market. p.m. here in:00 london. i am guy johnson. i will have the latest result from the election and how that is playing out in the markets. suggesting an
inconclusive election results with prime minister theresa may falling short of an absolute majority. just remember the exit poll is going to be changed and we are going to start to learn more details as we start to get constituency is coming through. we are trying to get the first in the northeast of england. we will track every twist and turn, there will be many over the next few hours. jon: it is said to be a hard night for theresa may, 314 seats, that is a projection where the conservatives could be headed. 326 is the magic number for a majority. back in 2015, they had the tories at 315. theresa may needs more than a slim majority. if she came into this looking to extend her majority, get a better negotiating strategy for brexit. anything less than 100 would be
seen as a disappointment for her. there is a chance of a small majority. it seems like a resounding rejection of her brexit plan. we are getting the first ones coming in. , whate labor --labour happens next? all of those seats heading up to the northeast, we are looking at sunderland. labor --labour has held sunderland since 1959. the u.k. collapsing in the polls, the question is, where are those u.k. voters going? are they going back into labour, or the conservatives? biggest regional swing for
the tories have happened in the northeast of england. a crucial part of the biggest co be watching as the initial results come through. will have aly we fuller picture of what will happen over the next few hours. what you are looking at is the biggest question. what does this mean for a hard brexit? seb: as i say, theresa may went into this looking to extend her , intiating position brussels. even if she has a slim majority, it will make getting legislation through very difficult. it seems the electorate here is looking for a softer version of brexit than what theresa may has put forward. checking inll be with you throughout the course of the next few hours. we will continue to follow the election across bloomberg television later on bloomberg surveillance we hear from a former u.k. justice secretary. we will also be hearing from sydney or8:30 in
11:30 a.m. in london. the other big story making headlines, one third of what we were talking about, this triple whammy for markets, former fbi director james comey has accused the president and white house of line. the story.cio is on we did get the political theater we were anticipating. not so much of a reaction when it comes to markets. ramy: markets stayed a little calm. a lot of fireworks. two and a half hours from former fbi director comey talking to the senate intelligence family. during the course, what is the biggest take away? the biggest take away is that the fbi director admitted he leaked his own memo to a friend in order to get it out there. let's take a listen to his own words. was, iey: my judgment needed to get that out into the public square. i asked a friend of mine to share the content of the memo with a reporter.
for a variety of reasons i asked him to, i thought it might appoint -- prompted the appointment of a special counsel. know now that is in the works, with robert mueller, former fbi director. in talking about the speech and the dishonesty that he has towards mr. trump here. i counted a handful of times lie mr. comey said the word when referencing donald, as well as his actions. tookxample, comey said he notes because he was honestly concerned he might like him a lot -- he being the president here. he also said trump's criticism of the fbi and its essentially falling morale were "lies, plain ." simple i want to point out the obstruction of justice. take a listen. mr. comey: it is not for me to say whether the conversation i
had with the president was to obstruct. i took it as a very disturbing, concerning thing. that is a conclusion the special counsel work toward to figure out what the intention was there and whether that is an offense. noobstruction -- ramy: obstruction of justice, at least right now. house intelligence committee is also doing its work, along with the special counsel. guy: donald trump's own lawyer came out with a statement, to push back against what a lot of comey said. are they treating him like a political opponent? ramy: definitely, his advisers said they would not let him get away with anything here. the would try to protect president, especially coming from the former fbi director. mr. trump's own personal lawyer -- the fact he has his own personal lawyer coming out so isly in his and ministration something, in and of itself.
his personal lawyer was saying basically anything that could support the president, mr. comey's words were true. anything that negated or said mr. trump was in the wrong was false. take a listen. >> the president feels completely vindicated and is eager to continue moving forward with his agenda with in the business of this country, and this public cloud removed. ramy: that was marc kasowitz. whether he feels vindicated, that is one thing. whether he can move forward with any policy agenda is a another thing -- is another thing. about infrastructure weakness, the rollback of dodd-frank that just happened on capitol hill. a lot of people are saying political capital has been spent and continues to be spent, and he is running out of it right now. the house does have its special
intelligence committee as well as special counsel. richard burr, the senate intelligence chair for the republicans says that this is hardly far from over. guy: ramy inocencio, great coverage. a story we will be coming back to. plenty of stories we're coming back to. let's catch up on what we need to know. here is first word news with courtney collins. draghipresident mario says the european economy has turned a corner. but the job market is lagging behind. draghi says threats to growth are now balanced and he may cut rates again. he warned nothing has changed on inflation and employment and says they need to taper the ecb's 2.6 dollars trillion bond buying program. the man once seen as a potential successor to jpmorgan's jamie dimon is leaving the market after 13 years. operator inief
2012. his rapid rise of saw him in the running for the top job. zames wasnot say why leaving. he says he is sad to see him go but respect his decision. a defiant tone in continuing isolation, saying it can expand the pressure for as long as necessary. have arabia and its allies yet to submit demand to resolve the crisis, which has seen diplomatic ties severed, along with land, sea, and air links. shiite militants could destabilize the gulf. moody's has launched an appeal against the judgment it broke qualcomm regulatory codes of conduct, which resulted in a $1.4 million fine. the commission said a 2011 report on companies failed to properly explained judgments and explain the accuracy of its claims. concerns of critical
commentary. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. guy: thank you very much. let's talk about what is happening in the united kingdom. counting is underway, polls are closed. a hung parliament looking possible, according to exit polls. the first two seem to declare in the northeast of england. you can see this on your bloomberg, a map of their. two seem to have gone to labour. this is a live excerpt from sunderland. take onget the bank's this three the u.k. poll results putting the pound under pressure. inwill get more commentary the fx markets within the next hour. haidi: taking a look at some of
♪ guy: i am guy johnson in london. haidi: i am haidi lun in sydney. you are watching "the u.k. decides." extraordinary turn of events. the peterson institute president . we were speaking in the break about your initial take. do you think the tories will scrape by eventually. tell us about the fractious
situation when it comes to the u.k. electorate. >> the point i am trying to politics,o make, u.k. are like italy or the u.s.. they are incredibly regionally divided countries with a concentration of wealth and immigration in certain places. and complete backwardness in other places. huge decline in productivity growth. we have seen this before. the u.k. always thought the electoral system would push everyone together. it is no longer happening. haidi: what is your best case scenario mean for brexit? one thing we talked about was the idea of a soft brexit under labor -- under a labour government. it is not up to the u.k., in a large part, anyway. adam: you just read out was i was going to say -- what i was
going to say. it is not entirely the u.k.'s choice. if they turn around and say they want a soft, soft, soft brexit, it may become part of the goal with labor --labour. they may force the u.k. into the norway situation, which is not so soft. but at least it would be constructive. the more important point, do the labour leadership have the guts this is a ofsay the may brexit approach, and say not only a soft, soft exit, but we want to reconsider the whole thing? i think they should do that. there is no point in a slavishly following after so-called a when the country has reversed itself a three years. guy: adam, good evening, it is guy.
my sense is, this election was not about brexit, but things like government spending, police theers, austerity, the nhs, issues that resonate with people still recovering from the great recession, which hit the u.k. pretty hard. i know that employment levels are pretty solid in the united kingdom, but many people continue to hurt. isn't that what this election was about? it was a backlash against, let's use a broad brush your, austerity. adam: that is an entirely valid point, guy. i have two responses. you are absolutely right. the funding of the nhs, the national health service, and the general austerity, is what is being rejected. is right to have run against that and should claim that is part of their mandate. my other point is, if people turned around on those issues and were not voting brexit,
which is consistent with your analysts pointing out the u.k. people either dropped out or switched back to labor, brexit is the end-all and be-all. labour labor should take advantage of that. no disagreement, it is probably austerity and nhs. that means people were not voting brexit, so you can do the right thing. the you are halfway down road from where i'm sitting now. how do you run monetary policy where pound is run down the way it is now? and you have no idea what fiscal policy will end up looking like? are right. the point about uncertainty and fiscal policy, in the u.s., the fed is trying to wait it out and see what fiscal policy will come out of the u.s. policy. we do not know what that will be, either. that is not so unusual. the idea of the pound to a concern for the u.k. into way --
in a way it has not been a since what wills warning eventually constrain the bank of england is the need to restore faith in the pound. when i say constrain, that means put limit on keeping the rates low and a loose forever. we are not there yet. there is no reason the bank of england should overreact overnight news when this was a shock result. if the sterling decline continues, they have to take that into account. upset in we do get an what are the implications when it comes to how the u.k. deals with the euro? you have been pretty critical of the conservatives, the way theresa may has been confrontational. does this change the game if we get a hung parliament? do get distinctly different negotiations? question, andgood
the answer is, we should but we cannot count on it. the reason we should is because you are allowed to take this as a mandate that people did not like austerity or the way brexit was being handled, so you might as well. second, it is about not bargaining power, but figuring out what it is you want from the e.u. and what it is you can offer them. i think theresa may was opposing, according to newspaper leaks, and i'm sure those in labour are proposing, to be more protective of e.u. citizen rights were living in the u.k., which is a good thing. that would be a huge confidence building first step. the second thing is, the question of just how hostile are they to europe? how bad is the rhetoric? are they like trump? corbyn does not have a record of
being pro-european, he seems to be pro-brexit. if he is smart, he says we do not have to be enemies of the europeans, we can be less belligerent. i am a business in u.k., in europe, i am trying to figure out what to do this morning. what advice can you give? you are an economist, you have been on the mpc, you understand how the british economy works. how should i be feeling as a ceo of a british company? how do i run my company, go to my staff and say this is our plan in this environment? toughguy, it is a really question on i do not pretend to know. first you go to your staff and say, i do not know what the plan is, and that is ok. we are selling, the u.k. is solid on fundamentals. it may take a few months to shake out, we will not make major decisions until it is over.
obviously it is negative for the economy, but they hold on investment and restrains a risk-taking and performance, but answer.e best possible you can talk about british history. there have been other periods of extended national security uncertainty. we can wait those out. if you are thinking beyond the next three or four months, you have to be thinking that this u.k. is not a place you want to increase investment right now. dems say the labour lib does not do the corporate tax cuts of that may and the tories were talking about. on the merits you can argue that is a good thing. but then you have one less thing to attract and retain investment with. guy: stick around, we need to get more of your thoughts for our audience this morning. a former member of the monetary policy committee at the bank of england. knows more than many about
what happens with the pound and its impact in the british economy. the pound lower across the board in terms of what we saw this morning when the exit poll came out. this is the cable rate. you can see that gap. we have affirmed a little bit. it is going to be about how the next few hours trend in terms of how these go to see how the pound will work. finde lower, beginning to a little bit of form. most in the u.k. would've been expected to clear and go home. we have more liquidity than we normally would expect. nevertheless, late liquidity here. haidi: we have to wonder if on, the pent-up going trifecta of risk affects, we did not see much market reaction to comey's testimony or the ecb.
if it is a hung parliament, another layer of uncertainty for fx trading to grapple with. see how futures are heading up. s&p futures looking at touch lower in asian trade. completely unexpected, not much of a move in the u.s. session. treasuries, a tad stronger. a bid when it comes to the yen and gold. a bit of a safe haven sentiment. mild risk. these days, very much unclear how these polls will turn out, u.s. stocks ending a pretty up-and-down session. oily big mover, extending on hase concerns perhaps opec its hands tied on what is going on because of what is happening on the u.s. side of productions. let's get a rundown of wall street with su keenan. su: we had green on the screen,
that is eroding in the futures. what sets us up for the five day trade will be different than how we closed thursday, which was on the back of strong economic numbers. jobless claims were lower, job confidence was high. yahoo! shareholders approved a $4.5 billion sale of verizon. yay on that deal. nvidia, the star of the s&p, up 54% in the past month. tripled in values. investors liking that. nordstrom, family owners exploring going private. a $70 takeout scenario. investor jumping in to be part of that. at's talk about the market, stress free market going into the friday session. investors have assessed geopolitical risk as idiosyncratic and focused on the global economy powering ahead
despite lower inflation. this is the b of a merrill lynch at its lowest since 2014. a lot of things to do with options, very much changing as we speak. guy: it certainly is. a volatile week for the energy market. stabilization beginning to creep in. give us the feed on what is going on. where we sing the market, down? su: a little bit of short covering as the market stabilized. let's go into another bloomberg chart. we want to show you the daily york traded crude oil. drops over 5% yesterday. we have not had any climbs over 5% since november. in short parlance, harder than the buying action. the headlines are, many traders -- we closed it near the low. to $46 after
trading in a big way on a supply build. to quote one trader, every time we get a trade that shakes our confidence, we have little to go on in terms of bullish catalysts. if you'rehart, playing along at home, what this is, it shows that the energy stocks have been trading at the cheapest level versus the broadest index. that is on the right side. 2003 -- it is a bigger part of the energy downturn in recent weeks. guy: what a series of markets, fantastic stuff. let's get back to what is kingdom. in the united the exit polls the just a hung parliament. now we are getting into the results. kingdom. bloomberg. you can follow this on your the page looks a little like this. you can get this map and coming
closer to some of the key constituencies. that will allow you to see these. first thing to be called. first thing to be called. more coverage coming first thing to be called. more coverage coming so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business
charlie: it is 11:30 p.m. in london. it is turning out to be quite a night this thursday. you're looking at live counting as we continue to see the constituencies coming in. you'reand is the shot looking at. haidi: guy: 650 constituencies and two have declared. we are fascinated to see what is going on. the early suggestion is that we are going to get a hung parliament. but the exit poll was a little out last time. haidi: clearly, too early to call that. guy, a remarkable thing.
did the polls get it wrong again, after brexit, after the u.s. election? we are looking for the potential for an upset. this reverberates across the fx market. it's 8:30 in sydney. asia markets the first to react to all of this drama coming out of the u.k. vote. we're taking a look at our futures setting up ahead of that sydney open. we do have upside when it comes to the asx. but looking ahead to some key china inflation's numbers. taking a look at particular the japan open and chicago futures turning red. situation with u.s. features and that big -- yen across gold and u.s. treasuries. risking going on ahead of this count. guy: we had called the show "the we. decides," but i think
may need to rethink that title to be honest because the high degree of uncertainty. the u.k. has decided but we are not entirely sure what the u.k. has decided. we are going to find out. let's go to bloomberg first word news. >> thanks so much. fired fbi chief james comey has accused president trump and the white house of lying and defa ming him on testimony on capitol hill. comey said the president -- the presidents explanations were plain and simple. he had detailed memos of the conversation because eager the president would paint a false picture of their encounter. >> the administration then chose and more me importantly the fbi by saying the organization was in disarray, that it was poorly led, that the workforce had lost confidence in its leader. those were lies, plain and simple. >> the trump administration's
houseo dismantle -- with republicans approving a bill that rips up major assets of the dodd frank act. thever, the bill called financial choice act has little chance of passing the senate. democrats are unimpressed. bank of japan governor kuroda says the economy has escaped deflation but has a long way to inflationthe 2% target. speaking at oxford, he says the bank has steered japan in the right direction but the jury is not over. show gdpt data expanded for a fifth straight quarter, the longest streak in a decade but 2% inflation remains far out of reach. news 24 hours a day powered by 2700 journalists and analysts in 120 countries, i'm courtney collins. this is bloomberg. haidi: guy: let's get back to the u.k.
exit polls and the u.k. suggesting it inconclusive election result with theresa may's conservatives falling short of a majority in permit. it is early days. it is going to be a long, long thet as we go through individual constituencies. joining us is the bloomberg intelligence chief european economist, janie murray. there's a number of ways of coming at this story. let's talk about what it means for brexit. if you can come up with a great answer, i am all ears. jamie: let's forget about the exit polls. let's imagine that theresa may got a bigger majority. we are looking at a softer brexit, potentially because she would have her hands freed. let's imagine instead that labour had won the majority. they may have been able to secure softer brexit. but where we are now, we have no one in power, a hung parliament and that means the government is rudderless.
and negotiations are supposed to start a week monday. this is delaying the beginning of the negotiations by six months, maybe another election, who knows? we are up against a two-year deadline. this is increasing the prospect significantly of a hard brexit . guy: uncertainty. not exactly a great word when it comes to running an economy. you like certainty and unite to make -- like to make long-term decisions and pull in capital and investment. you want the population to know what is going on. we do not have that. what is the economic consequence of what potentially could happen tonight? jamie: if you cast your mind back to the brexit vote, what we saw was a sharp rise in uncertainty, both because of the negotiations, all that, but also the politics as well. and that was a result of very quickly because we had a new prime minister so quickly -- that was result very quickly. fromhere was no major drag
uncertainty on household consumption. this time around, if the fiscal uncertainty last, and it is hard to imagine it will be resolved within a month, if there is a hung parliament, this could dent the economy by more. haidi: all right. i just want to bring into the conversation with his -- adam pozen. thank you so much for staying with us. i have been looking at this statement from mario draghi. typical draghi. downplaying any expectation that the ecb is talking about unwinding q.e. he has downplayed the impact of brexit on the european economy to date. do you think this variety of scenarios we are looking at would change that? adam: i don't think it does. i think the fundamentals remain
that it would be a loss in general for the e.u. economy to have britain leave. it is a one time loss. it does not have any transformative effects or create ongoing uncertainty. the only issue that really is sort of lingering is this status of the e.u. residents currently in london and in the rest of the u.k. that should be result one hopes in a humane fashion. no, draghi is right. there is nothing to imperil the e.u. recovery out of anything that happens in the u.k. now. my feeling is that the eurozone recovery is always kind of fragile. we see these risks flareup from time to time. is your impression that the eurozone is beyond these risks or can this trigger instability? ofm: in my view, this stage
the recovery is fundamentally different. if you look at it, it is incredibly brought across all of europe even countries in the so-called periphery have been growing. countries like germany and spain and ireland are showing decent productivity growth in exports. they got a boost from lower oil prices. legs ina recovery with europe. i do not feel it is that fragile. now, things could go wrong. thetalian election -- italian election does represent a lot of risk, but i don't view the e.u. recovery this cycle is being fragile, no. let's's well on that idea for a moment. let's look at the u.k. tonight, a deeply divided country. that is where we came in into this conversation. we were discussing the fact that this is an incredibly polarized nation. italy feels like an incredibly polarized nation right now. i can draw a line pretty clearly between one and the other.
will he get a similar result in italy? where does that leave the e.u.? where does that leave the eurozone? you would have an anti-eurozone government in occupation in rome. five: yeah, i think the -- star movement getting ahead is the biggest threat to the your area right now and it is a political threat, not an economic threat. what i was just trying to say to your colleague is that is a very specific problem they have to worry about, but it's not that the recovery in general is fragile. when we talk about a divided society like italy, guy, we have got to think about what the election rules are. you guys have been talking about the triple witching hour. buried in there was the announcement that the five star's pulling out of the electoral reform laws in italy.
they realize they were not going to be in a coalition with any of the three major parties and they pulled out. the italy is going to have to play hardball with five star almost as much as france did with the national front. the five star are not quite the fascists the national front are, think god, but you have to hope the majority of the italian people wake up. does feel like after we had that -- with the france and the netherlands, and we are not quite through that populist sentiment. adam, thank you so much. the president of the peterson institute. as well as our chief european economist, jamie murray. let's get more on what we should be watching is trading is underweight and -- trading gets underway as that u.k. goes on. adam, we have seen this reaction. i want to bring up this chart because i think it is great.
90-237.chart number a big win for the conservatives followed by a small win, followed by a labour win, a hung parliament and the corresponding levels we are seeing forecast for the pound. what are you looking at, and do you expect to see the risk of contagion? adam: i think what this chart shows you is how the range of outcomes was so big going into this. we have got a surprise. the key thing i think this morning is kind of asian traders arrive at their desk is it is that it is very contained within the pound-dollar corss -- cross. what we are not seeing is a huge move in the risk off. not seeing huge rallying gold. u.s. equity index futures are not selling off. they are down 90.2%. gold is up before i came and sat in this chair.
clearly the sterling trading is showing that we have a certain situation in the u.k. over the next few hours, we will know really what has happened in that election. i think it's important to note that it's localizer not spreading across financial markets. guy: do you get a sense that the markets doesn't know what to do with this yet? a position where we can see the accounts over the next few hours. guy: the market, after a big reaction, does the markets it tell you on this one? -- sit tight on this one? i suppose ofuy, this point you do not want to make any bets either way, unless you are short term. if you are a long-term investor, you are speaking to the idea of uncertainty around ceo's, but certainly uncertainty from an investment point of view when you're allocating your capital as a fund manager, you will do exactly -- sit tyhrough the
night in london and see if indeed this exit polls are a true reflection of how britain has voted on thursday or not. there's still room for some disagreement as to what actually happened relative to what this first exit poll is showing. ndeed, there may be a bit of investors sitting tight, counting can take some time and a lot of constituencies. we have got the first two in, -- in, but it is early days. that may be one reason we are not seeing any huge move across financial markets. if you expected a lot of worry and a lot of concern you may have already seen that in gold equitylar-yet and u.s. futures would have sold off. and we have not seen that yet. guy: great stuff.
we're going to carry on the conversation. up next, we will talk to jeffrey yu, ubs's private banking expert on sterling. used to be kind of the head of the foreign exchanges side of things. the private banking story is now his bag. we will get his take when it comes to the u.k. yu will join us next. this is bloomberg. ♪
waiting to see whether the risk off sentiment spreads across other asset classes, too. guy: we're also watching the results coming in. i'm guy johnson in london. sutherland central going to the labour party with his swing and some of these seats -- it is fascinating and terms of the way it's unfolding at the moment and turnout seems to be the critical factor. you can see all of this. onfantastic function bloomberg. it is called e.u. . it will give you this map, which is a great way of analyzing how the vote is unfolding. all of the action in the northeast of england. some of the key seats declaring. we've just seen, this is sutherland south. you have sutherland central. you have south shield as well. newcastle. newcastle north. so, this is an area that really kind of comprised -- surprise people during the brexit vote and is coming up for the labour party.
the swing is the critical thing to pay attention to. dramatic stories, just emerging across the u.k. the applications for the foreign exchange market, the initial knee-jerk reaction has kicked the pound lower. jeffrey yu is the heada of investment at ubs private banking. first reaction? jeffrey: when do we ever learn? nothing is a foregone conclusion. it looks like it has been swinging and patterns all over the place. there is no uniform story yet. i think we have to look things -- at things out a one-on-one basis. it is going to be a long night. too early to talk about coalitions and the like. yeah, so uncertainty. if you look at how the pound has behaved. yes, clearly markets were not positioned for this. we not exactly in post brexit lows.
does this mean hard brexit? probably not. guy: where do i go next? we can take a look at this. let me dig around in the charts to find some of the fords and we will try to understand what is happening here. this is the cable rate. risk reversals as a ratio versus the implied volatility. a softer pound expected to go forward from where we are now. geoffrey: it's really moved against the pound. as we've seen polls tighten. interested to see where the one year and two year, the end of brexit talks. i'm wondering, if you look at the potential pair, it is quite asymmetric. if those value pledges -- punt ers in and start to look for raws brexit, towards a
the tories pursuing a more moderate line, there might be a lot of value in sterling upside. let'ss see how the curve reacts. haidi: that seems like quite a bit of time down the road. it looks like you look at the different possibilities we get andof the count today, essentially all of them are adding extra pressure on to on top of what is already in ambitious timeline to get the brexit deal done. geoffrey: if you look at what the exit polls are supposed to do, they wanted to get within 20 seats. if we do get plus 20 in the best case scenario, right now, from the exit polls, 334 seats. for the conservatives, that is to -- not too far off from where they were to begin with. this could undermine theresa
may's authority. is there going to be a leadership change? does that make the brexit negotiations -- for the future we are looking at some uncertainty. who's going to be leading the government? we'll see how these panel. the way exit polls are regulated, based on prior history. those rules may not apply. is hardlybe fair, 2% earth shattering. we are not seeing that much of a risk off development when it comes to future markets, when it comes to how asia is seto to open. markets a sense that are more sanguine and we are waiting to see how the picture develops over the next couple hours? geoffrey: there are two things. firstly, no matter what happens, brexit is happening. so, even jeremy corbyn has accepted that. it is just the path of brexit.
secondly, if you look at the international reaction, left june when brexit happen, if you look at implied rules in europe and people looking at european bonds, we were looking at the disintegration of the e.u. project. but look at the continental ands in holland and france, what could be the case in germany, the center is holding. right now this is going to be a more isolating impact on the u.k. rather than any broader implications. guy: what clientsare going to do with their money? geoffrey: i think clients are going to be somewhat concerned. the uncertainty is weighing on things but we have been advocating a diversified portfolio. the u.k. based clients. last year they have seen how weaker sterling has done a fitted their overseas position. right now we are overweight global equities and clients who are invested in overseas equities, are unhedged. that won't hit their portfolios.
there will be more concerns about how brexit will look. given the uncertainty. guy: how do you do monetary policy this in private? geoffrey: governor carney will try to separate things. when there's uncertainty, when uncertainty reigns, as we saw last year, they are going to be quite defensive. they can take prince of measures. measures.tive that would be stretching it somewhat, but the u.k. economy was entering a soft patch. the erosion and reeling from that, that was happening. it adds to uncertainty that we would have to see it for 3-6 months and a serious downturn. guy: how does he make monetary policy? the labour party would raise the tax base to the highest level on record. geoffrey: that is where business sentiment, that is going to be absolutely essential. that will be a key indicator and another thing to buttress that
if that is going to be the risk, then sterling could fall further. that is automatically an offset. i think he's going to keep his powder dry and stress oif to boe is going to choose make a statement -- so they stand ready to do what is needed. even after brexit there was not too much in terms of covering their basis. we'll see. haidi: in terms of when markets have taken themselves up to thise point, we have been trying to work out what has been ngiving this, everyithign rally. you have bonds and equities hitting day record highs. what is next from here? what's really driving this? is it as simple as liquidity? geoffrey: overall right now i think liquidity is less of a driver if you compare to this time last year when fear was the world economy was stuck in deflation or disinflation. that the banks are going to do
more. if you look what happened with the ecb yesterday, a bit of everything. same timet at the noting that given inflation does not look to be stable -- they are going to be ready to provide additional liquidity and do what's needed. right now we still go back to grow. we go back to reflation. current levels heading into next year. this basically underpins our global equities. right now it feels like the market was to play safe. value trades. right now we are overweight bureau equities vs -- euro equities versus the u.k. depending on how the night develops. guy: is there a read across and two other political environs is this something i can take away from the u.k.? the brexit vote was not about the e.u. it was about all of bunch of things. different factors altogether. what can i take away from this
that informs me about what is happening more broadly in western societies? geoffrey: it depends on who you're asking. it would be fascinating to look at the ukip turnout because of heading into the vote, the higher the youth turnout assumption. the narrower the gap. we know the youth turnout, let's just say, disappointed during the referendum. is this a chance for them to make their voices heard? ly, more towards the progressive side. if we combine this vote with the european situation, maybe we are starting adjustments back in the center. guy: thank you very much. jeffrey yu joining us from ubs. plenty more conversations to have with him as we try to work her way through a long night of british politics. there are some great functions on your bloomberg. a top live running. you can follow the latest on the election. a market blog as well. we'll run those two things
side-by-side. there is another great function, and that is e.u. . that is going to give the latest surrounding what is happening. we're about to hear from newcastle. what that gives us is this map, which is just brilliant because what it does is it breaks down 650y, there are constituents in the u.k. at the moment all the action is up here in the northeast of england. au've got down here, breakdown of the seats and the vote counts. so, labour taking the first four. that was largely expected. now we are starting to get some interesting ones. swindon is declaring down on the southwest. that is going to be fascinating. haidi: yeah, that is a really great fortune, the map. give us a better picture of what kind of risk we're dealing with here. the prospect of a hung
exit polls adjust the u.k. is headed for a hung parliament with theresa may falling short of a majority. speculation sense sterling plunging to its lowest since april. it adds to the uncertainty surrounding brexit. and questions are being asked about the prime minister's future. george osborne says she may not survive. and war of words in washington. fired fbi director james comey accuses president trump of lying and defa