tv Bloomberg Surveillance Bloomberg June 9, 2017 4:00am-7:02am EDT
francine: may this calculation. the prime minister's snap election backfires. jeremy corbyn has called for her to resign. reports of the tory leader due to speak in an hour. might we get a soft brexit? could it radically alter negotiations with the european union? sterling slums while u.s. stocks rise. will multinationals set to gain from the weaker pound? this is bloomberg "surveillance ." i'm live from westminster. you can hear big been sounding behind me.
we will have the latest, but first, let's check in on the markets with mark barton. mark: e.u. go. look at the right hand side of the chart. look at the map. tories 315. 326 is the number they need. they are not going to get that number. this is not a brexit type of exit. european stocks are rising. ftse is gaining because of the weak pound. biggest decline since june 27. sterling two day chart. that is when the exit polls came out at 10 p.m. last night. we'd be down as much as 2.5%. vote, the expectations were if we got a hung parliament, sterling could fall as much as 1.20. the median
forecast. the 10 -- before the vote deutsche bank set if we get a labour victory, the 10 year goes up. if we get a tory, small majority we go down to 90 basis points. fascinating times, but it's ver y much a localized market reaction. francine: thank you so much. she promised strong and stable. but we have this morning is anything but. the snap election gamble has backfired. losing seats rather than gaining them. may's future as prime minister has been thrown into doubt and there are reports she will speak at 10 a.m. her rival jeremy corbyn has outperformed. and his labour party looks to be on course to gain 29 seats, according to the bbc. he's called on theresa may to resign. >> the prime minister called the
election because she wanted a. mandade. she has got has lost conservative seats, lost the vote and lost confidence. i would've thought that was enough to go, actually, and make that wouldovernment be truly representative of all the people of this country. francine: in a moment, we look at the latest market reaction with matt miller. first, let's get to downing street. talk us through the numbers of everything that has happened overnight. what's happened overnight as you have been saying is a big shock. in terms of where we are looking now, we have just got a handful of seats left a report. expected to get the final results by midday. according to the projections, the conservatives could finish with 318 seats, down from 330. labour could finish with 261, a
gain of 29. so, what does this mean? it means the most likely scenario we're looking at is a hung parliament, a conservative minority government, perhaps the most likely coalition is ti could be the conservative with the dup. what we're already getting as calls from within the tory party but also from jeremy corbyn for theresa may to step down. she spoke overnight in her constituency. she said what the country needs instability. if the conservatives get the most seats, it will be their prerogative to maintain stability. and form a coalition. jeremy corbyn has been calling for her to step down. leading the us, there is going to be a lot of uncertainty in terms of what
this means for the brexit negotiations. we still have uncertainty over exactly how that government is going to be formed as well. francine: thank you so much. we do understand, according to press reports, that theresa may is speaking and 55 minutes from now. very likely she'll do it from downing street. matt, let's get to you on the trading floor to what is the mood like there? say a lot of the traders have been here for 24 hours already. they came in yesterday at the regular time and have been trading through the night. that said, trading was relatively calm overnight. even after the exit polls came out and after became a fairly clear that there could be a hung parliament. it's been very focused on almost only the cable trade. euro-poundally has been as active. not as active as during brexit
and during the trump election but relatively calm, steady selling a pounds. at one point we came down below 127. i will say the volume picked up dramatically after 6:00 a.m. when a number of media outlets said, called the election as a hung parliament. since then, you have seen some actual support in the pound. andere down at 126.90 bounced back up to 127 and change. it looks like we have seen the bottom for now but traders are poor. for the remarks at 10:00 trying to figure out what theresa may is going to say, what direction the conservative party is going to take. if they can cobble together a slim majority and how that affects brexit talks. and looks like they do not want to hold the pound into the weekend that we will see after the speech at 10:00. francine: thank you, matt miller. we will go back to them both. the miller there for us on
credit suisse trading floor in london. let's get more on this shock election. just three weeks ago theresa may just sixif i lose seats, i will lose this election and jeremy corbyn will be sitting down to negotiate with europe. she's lost far more than that. what is in store for her? let's ask a bloomberg news political report. we understand that the tory government has 318. dup has 10. can they form a coalition and will theresa may remain prime minister? >> they may not go for a coalition. what they could go for it is an issue by issue minority ingernment, i.e., the dup say we will back you. we have our conditions. but this is a very, very shaky scenario, indeed. and that is the best theresa may can hope for. may is going to try to cling
onto t power but she has lost a lot of support within the party. francine: give me a sense of what it means for brexit negotiations. they were due to start on june 19. is there any appetite for europe to postpone them a little bit? >> well, i think let's figure out first where we are, what kind of the government we have, because the other thing that could happen is, of course, when whatever conservative government we have, if that is indeed the scenario, puts together -- we have to see if they get enough votes to get it. that would delay another election for now but we could be quitey shaky ground for a few weeks if not a few months. it is very likely in this scenario that brexit talks are delayed. at some point, suspended for a few days, few weeks. we don't really know who is going to be doing the negotiating. francine: give me a sense of
what happened in scotland? the snp losing ground. was that because nicole last sturgeon said she would have a second referendum? >> that was unappealing to a lot of scottish voters. a strong party. they lost quite a few seats. that they had an incredible gain in the last election. they will be a player if labour try and put together a rival government, sort of rainbow coalition, which i would not completely excludes that. ruth davidson, the conservative letter in scotland, did a very good campaign, much better than theresa may's campaign. francine: thank you so much. our u.k. politics reporter. joining me here at westminster
is lord -- a former shadow lord chancellor and partner in a law firm. thank you so much for joining us today. first of all, a quick reaction. for labour?g win he does not have a majority. >> he does not have the majority but the prime minister is destroyed. that is the problem. it is inconceivable the prime minister could continue for any length of time for more than a transition are period. whether it be from the tories or another party because her difficulty is she said she wanted a majority, a bigger majority that she has got in order to have a mandate to negotiate pitch he did not get it. she went backwards. the public have said no to her. and everybody in the country thinks she has no judgment.
she is a completely lame-duck prime minister. from my experience, i cannot think how she could survive in the house of commons on the basis she is -- but understanding briefly that she is giving from 10 downing street that she intends to stay. francine: we understand by speaking to sources and she will give a speech and 50 minutes. how do you see it playing out? the tories could find a deal with the dup. they replace her with who? >> it all depends on the numbers are if they can do a deal with a smaller party, the northern irish party, or the democratic unionists, that would give them over 326 votes in parliament. francine: do you think they will? >> they can do it, because the dup will extract a price. that is a very unstable government because her own party, the conservatives, have got some people who want a hard brexit. and the dup only give her
majority of three or four. there will be pressures within her own party and that will fall quickly. francine: let's say that she either gets the tories -- can't get a government together or she falls. if you are labour -- >> in order for them to be, labour has allied himself with anybody, what they will say to parliament is we want to form a coalition government. favor of the queen's speech that sets out the program for the government. francine: with who? >> with nobody. you have to say i am a labour minority government and it is for the -- the fmp to decide whether or not they are going to support the government and support labour. but the person who gets the first shot is the city government. and the city government is a tory. the first question is should mrs. may go? francine: let's say she goes or
she stays, unexpected and there is going to be turmoil in u.k. politics. to go, thencides the brexit talks have to be postponed. there is no point in the european union negotiating with a government that does not have a boss. you need a boss to give a direction. if she decides to stay and she can get the dup to support her, that she has got to agree with parliament what her negotiation is. she has got no authority. hascine: the article 50 been triggered. the countdown is there. do you think your pulsate, ok -- that europe will say, ok. >> if there needs to me postpone it. you cannot negotiate. francine: what happens to the countdown clock? >> it keeps on going. it is not really post moment. -- postponement. >> it is not a postponement of the end day.
in nineple not starting days time or 11 days time which is when the talks are set to start with the european union trade they have to start at a later date as reduces the amount of time available for the talks. as you rightly point out, it does not mean the end date is any later. francine: what is it mean for fresh election? what does that mean for negotiations? >> i can't see a stable government emerging from the dup and the conservatives. it might last for a short time. francine: what happened overnight? we have a hung parliament. what did people exactly vote on? >> i think they voted much more an economic issues. i think the reason watching lost authority -- why she lost her majority is a very large numbers are fed up with austerity and fed up with wages stagnating and they want to change. they didn't want continuity.
although you and i talk about brexit, the public had the referendum. they voted against brexit. that's sort of got to be dealt with. they are much more into the economic issues. francine: this is essential because there is a little bit of hope in the market that this would lead to a softer brexit. >> i think it will. ultimately, the only authority the government can get in order to start the talks is by getting -- and parliament is much more pro the european union than mrs. may has been in her approach. francine: even when it comes to movement of people? >> there will have to be restrictions but a less hard brexit which she was going to negotiate. >> lord falconer, thanks for joining us. here in central london. let's get straight to the markets, back to mark barton. mark: the bloomberg is a mine of
information about the selection. some fascinating charts. starting with this one. odds checkerthe implied probability of the next government. clearly is the conservatives. the implied probability, 70% it will be a conservative minority. labour/snp coalition is the red line, 10% probability. labour minority light red, 3.9%. snp 2.1%ib dem, probability. tory, lib dem -- does not look likely. labour lib dem 21%. the most likely probability is a conservative minority. but it is changing. onanother wonderful chart. 9237. wese are the directions that
spoke to analyst before the result. they suggested sterling would move depending on the various outcomes. 131 was the big win for the tories. 130 was a small win. labour, the next line, the blue line, 124.87. a hung parliament 123.40. analyst suggested sterling would fall as much as 120 in a hung parliament. we're down as much as 2.5 today. biggest fall since june 27, just after the election, but we are nowhere near the 120. investors are looking ahead to the possibilities of a softer brexit. pricehas moved into gold in pounds, rising as much as 2.2%. biggest rise since july 5, 2016. because of sterling's decline, 100white line, the ftse approaching a record. but the yellow and blue line
both falling with concerns about domestic economy versus the ftse 100 benefiting from the weak pound. lots of fascinating charts in the wake of that shocker election which took place next e yesterday. francine: 126.98 is the pound level. from her offices in london. a hung told if there's parliament, it would fall off a cliff. it seems the market is more levelheaded than that. e me, it's only, excuse over the last couple of months someve had -- that's given support to cable but nevertheless, it is interesting this morning that cable dips further when we have the headline that theresa may would not resign. coming into the markets, perceptions give us this view if
theresa may goes, we may get a softer brexit. that clear uncertainty is paramount. it's the overwhelming factor which is why sterling is down. there is this perception that if in needs other votes parliament to push through whatever brexit it is or any prime minister, whatever brexit negotiations need to be pushed through parliament, it is likely to be a softer brexit if the conservative party don't have a majority, which they don't. the market is confused, we are all confused as to who will lead the tory party. when will brexit negotiations start? the market is beginning to think, actually, the brexit deal won't be as hard as we thought it would be just a few weeks ago. you concerned that the market thinks there could be be no brexit? oft there is some kind euphoria with demonstrators
saying maybe we have a second referendum, fresh elections will bring something fresh. is that in any way possible? a lot of commentators saying that would be a complete red herring. that's perhaps a little bit of a stretch at this point in time. if we consider the labour party manifesto. it was going for a soft brexit but a brexit nevertheless. the liberal democrats said they were still -- i think even the liberal democrats recognize that really for much of the electorate this election was not necessarily about brexit. it was about policing and immigration and the health and education systems. it was on domestic issues. it elected you and me, people in the markets that are so focused on brexit, perhaps not the election. for many politicians, the brexit, it's thought it will go ahead. what sort of her brexit we will have weather were not we get another referendum further down
the line on the brexit deal that has been done, at this moment, s eems unlikely but it is more likely than it seemed yesterday. francine: jane, we're just hearing from the commissioner for brexit talking to us from brussels saying brexit negotiations should start when theresa may is ready. it is unclear whether this means that the clock stopped or whether the clock continues. the u.k. has less of a chance of getting a deal in those two years. jane: that is the way that things stand today. the article 50 has been triggered. t negotiations later, we have less time to negotiate. which puts more pressure on the government. so, yes, this -- a difficult position. that said, there is the possibility of an extension. 27just means all the e.u.
have to agree on that perhaps they went. this is an unprecedented situation coming out of the e.u. maybe it could be that an extension could be negotiated. francine: jane, thank you so much for joining us. our senior fx strategist at rabobank. joining us is george buckley, the chief economist at nomura. what would be more significant to move the needle in terms of inflation, but also gdp? is it if theresa may stays or what happens to brexit negotiations? george: one of the big parts of gdp iis investment. it does not respond very well to uncertainty. we have gotten far too much over the last three years. i am not sure that investment will respond too positive to
that. on the consumer spending side, consumption tends to respond to prices. so if we see a continuation, which we do not think we will of the fall in sterling, then that would, of course, prompt potentially higher import prices and higher consumer prices and potentially weaker consumption. that is the sort of things we are looking at. issue is what big type of brexit this is going to cause. is it going to mean a softer or harder brexit or something in between? could it mean the suspension of talks? we'll have to wait and see what theresa may says in just over half an hour. francine: what happens to the economy if we have a minority government led by jeremy corbyn? that does the moment not seem as likely as having a minority government led by theresa may. again, we will have to see what she says but it seems to be the case she wants to stay on as prime minister. we will have to see at 10:00. but i suspect it is more likely
to be a conservative minority government propped up by the dup. i did not expect to be sitting here with a copy of the dup manifesto. it turns out they were just as surprised that their names have come into the fray. votes may not be required to hold a form a government at westminster. i suspect this will be a conservative minority government. how long that will last is anyone's guess. it might not last year. if that is the case, brexit negotiations may have to cannot -- to be put on hold. francine: this is complete speculation but does it make a difference if it is a minority tory government led by theresa may or not? i'm assuming yes because you could have someone much more prevalent than the current prime minister. what is that mean in your forecast? we have got to think about what we mean by soft
versus hard brexit. theresa may was proposing the harder end of the spectrum. what do we mean by soft brexit? we're talking about a situation where the u.k. is willing to make significant concessions to the europeans in favor of getting a good free trade deal. what would those concessions be? i imagine europe would want significant concessions on things like free movement. i'm not sure that really is consistent with the vote we had last year on brexit. it is there he difficult to know whether we could have a soft brexit. what ever you deliver is going to be at least middle to hard end of the spectrum. there will be very small changes in what type of brexit we might get. but very difficult to get a fully soft brexit because that means -- eea membership. francine: in 30 seconds, how much of a headache is mark carney having this morning? george: it makes it a lot less
likely we see a rate move anytime soon. we have been of the view that we will not see a rate hike until the second half of 2019, which has quite some time only. that reinforces that view because of the continued uncertainty, the impact that might have a the economy, the risk of higher prices if sterling continues to fall. all of that is negative for output, negative for growth expectations. it means the bank will stay on hold. francine: thank you so much. george berkeley, the chief economist at nomuyrra. up next, we talk about small businesses. we will ask the national chairman of the federation of small businesses to see how his members react to the elections. this is bloomberg. ♪
delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. tthat's why at comcast,t to be connected 24/7. we're always working to make our services more reliable. with technology that can update itself. and advanced fiber network infrastructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. francine: you are watching bloomberg "surveillance." a have a bunch of data in moment including industrial and manufacturing production and the
trade balance. we'll bring those numbers in just a second. first, let's get to the first word news in hong kong. let's continue the conversation on the u.k. because theresa may's future as prime minister has been thrown into doubt after her gamble to call an early election backfired. conservativest a party majority -- she thought. instead, hshe's fallen short of the 326 seats needed for a majority. has no reports she intention of standing down, even as jeremy corbyn calls for her to go. >> we are ready to do everything we can to put our program into operation. there is not a parliamentary majority for anybody at the present time. the party that lost is the conservative party. the argument the conservative party put forward in this
election has lost. we need a change. a hung parliament could see britain without a fully functioning government days before brexit negotiations. this could upset the two-year timetable. speaking after retaining her parliamentary seat, prime minister may called for a period the country as begins negotiations with the e.u. this is bloomberg. fran? francine: thank you so much. we're just getting breaking news. a lot of the data is worse than expected in terms of manufacturing. mark: it is, francine. the economy getting off to a weaker than expected start in the second quarter. industrial production, manufacturing posting, small gains. it was the first of the, falling far short of the 0.7% forecast
by economists. median missing the 0.8% estimate and could raise questions about momentum in the economy after growth slowed to 0.2% in the first quarter. so, it adds to uncertainty on top of the political uncertainty. there a better news on the tray site. -- trade side. the total deficit nearing to 2 billion pounds. the goods trade gap fell to the smallest in six months. the data has been overshadowed by the political situation. the economy getting off to a weaker than expected start in the second quarter. francine: mark, thank you so much. pound reaction, mainly on the election and may be looking at the economy. everything seems to be up in the air. westminster weather
have been calls for theresa may's resignation after her party failed to win a maturity. the pound has taken a hit. seemed it's biggest drop in almost a year. just 10 days before brexit negotiations are due to begin. joining me now is mike cherry. what does this mean for small businesses? you could argue it may be the end of austerity which means better, but then brexit negotiations look to be stalled. mike: clearly, the electorate voted and we now have a hung parliament. what we're called for the u.k. political parties to come haveher to make surew we political stability to ensure the economy can grow and businesses can create jobs we desperately need and the u.k., particularly as we go through brexit. this morning we have said we need a strong government. we need a prime minister who will see that through. therefore, it is only right that
the start of the negotiations be put back until that can take place. francine: we're just getting some breaking news for movies. -- moody's. moody's monitoring the uk's process of forming a new government. their rating will be given by brexit talks. are you more worried about fiscal spending than about brexit negotiations? think we are concerned about the domestic economy far more than brexit. clearly on the brexit negotiations, small businesses have, our members have said that they need as much open access to the european market as can be delivered. we need the right people with the right skills for the right jobs. so, immigration comes into that. of course, we then need to be making sure that whoever forms and however the next government is formed, the economic stability is there from the political parties to ensure that the domestic problems our
members are facing, which is increase costs, are delivered and we can make sure that the issues -- for small businesses are listened to and heard. francine: who do you think will be prime minister in seven days from now? mike: we're completely apolitical. but at the moment it looks like prime minister may will continue. francine: what will be her biggest challenge? is there a concern instead of focusing on small businesses and landing cycles, that because she has a minority government, she will be distracted by shenanigans that are going to take place right behind us. a coalitionre's government, it depends how that coalition is formed. we saw it in 2010. they provided certainty. you knew were both sides of that coalition were. i think the same will probably happen. at the end of the day, it's the issues of fsb members and small
businesses that have to be addressed if we are to achieve a strong outcome for the brexit negotiations and indeed deliver the economic environment for small businesses to grow their businesses. francine: what is more important for your members -- access to the single market or lower taxes? mike: axis to the single market, support -- access to the single potential we have the to double the amount who are exporting. that means the right support consistency for a much longer period than single parliament. francine: do you believe a lot of your members will be waking up looking at the news and saying, this means a softer brexit and that is not necessarily the case? mike: we should be fighting for what our members need, what fsb needs, and that is access to that market. francine: if you have red line, which is immigration or the free movement of people, it is very difficult to have any
negotiation. is that where you stop? our: we laid out what members want from the next government -- access to that market is pretty crucial, because 93% of those who export do so to the european market. let's not forget the emerging markets and a single country that stands up for all of our members is north america. so, very critical whatever negotiations take place around free trade that we have a small business chapter that supports small businesses. touchne: pound sterling a lower again today. will that be welcomed by your members? mike: clearly there is always two sides to have -- in the exchange markets. reflects on small businesses for those who are importing goods or services, then clearly there is increased costs. for those exporting, there should be much greater opportunity to get their goods and services and products into overseas markets. francine: wonderful. mike cherry, thank you for
joining us. the national chairman of the federation of small businesses. we were just talking a little bit about volatility on the pound tumbling. this is your market check. as the u.k. faces a hung parliament and an unclear course and its approaches exit the european union. u.k. stocks rallying the most amongst developed markets on the back of pound lower. this is bloomberg. ♪
on markets. seeing a little bit of the slide in the pound heard here is mark barton with your asset check. localized market reaction. this is the chart of the day, the map of the day. e.u. go is where you will find the election map here in the u.k. the color looks very blue. but it's rural areas. the city areas have turned out red. look at the percentage of the vote, conservatives 42.3%. labour 40%. theresa may needed 326 seats to gain a majority which means she is going to fall short and seek some sort of coalition with northern ireland's dup. this is the percentage drop in sterling, going back to just before the brexit vote. brexit sterling fell by 8% the trading day after brexit, 27th of june. today's decline, the 2.5% drop, was the biggestnc june the 27th when it fell by 3%. much as 2.5%.
the head of the election we surveyed analyst who suggested the worst-case scenario r sterling was a hung parliament. the immediate forecast was 123. what these analysts also said was in the longer run sterling could climb in the event of a hung parliament as the idea of a labour led coalition would eventually lead to a softer brexit in which the u.k. could remain part of the single e.u. market. sterling volatility is interesting. the blue line is weak volatility which is coming down. we're nowhere near the levels we saw in january. this goes back to the beginning of the last year. so, volatility is not a big issue. this goes back to my starting point -- investors are taking this hung parliament result in their stride. i'm talking about investors europeanwise. stocks are rising in the ftse is gaining because of the weak pound. down by 1.7%.
mixed fare for bonds. the 10 year note is lower, and the two year down by three basis points. this is not a brexit type event. francine: i am seeing breaking news from jean-claude juncker, speaking to a german newspaper. saying that he does not expect brexit talks to start quickly. welcome back. this is bloomberg "surveillance live from westminster. let's continue the conversation about pound weakness but investors taking the hung parliament in stride. joining us to talk more about this is our guest from the national institute of economic and social research director. thank you so much for joining us. give me a sense of actually the main thing you need to be looking after to see whether your forecast changes? first of all, i imagine is the prime minister.
who is it? >> let's go back from the politics and think about the economy. the institute kind of things the economy is going to continue to grow at sub par levels, under 2% this year and next. that is not going to change as a result of a hung parliament. the hung parliament is a fountain of a country that does not know where it wants to go. we had a hung parliament in 2010, a small majority in 2015. we've have two referenda on scotland and brexit. this is politicians not knowing what to do, going to the country saying what should we do? the country saying, we don't know. tell us what we need to do. we do not have a set of politicians coming up with the answers. we think about the proximate thing in the u.k., how do we from thean exit european union that least damage is economic prospects and helps those in europe? placed of want a plan in from any politician.
the sad thing is that the party in power did not come up with a plan for a year and neither did the opposition. we are going through these negotiations not knowing what we want to achieve. francine: with the local pressures within parties, you have remainers. could imagine and you could say with any certainty that boris johnson, theresa may or jeremy corbyn could be prime minister in three months? >> i don't want to say who would be prime minister. that is the problem. well, with the wind the right direction, you could be prime minister. we don't know. i say we got a hung parliament. the most likely thing will have is another election. the election position has to be a point in which o parties explain what they are going to do. growth inot had any productivity or real wages. the anxiety that is causing households is what we are seeing reflected in the vote. francine: is that going to get
worse with a hung parliament, especially if we have a fresh election and six-month? what will happen in six months? >> in effect, we have not had many decisions made in the last year, with the incoming prime minister and unable to create a coalition among her own party to decide how to proceed with european negotiations. we would've preferred a clear stance about what it is we are trying to achieve. in order to create a coalition, we had secrecy. the idea of the election was to theh that o ut and give prime minister a mandate to say what she was trying to achieve. that has failed because at no point has there been clarity on what needs to be done. francine: to your point, actually. we do not know what this country wants. what do you think the people of this country wanted by voting? did the vote on brexit or austerity? did they vote on personality? > >> it was almost a vote for none of the above. in that sense, i do not think we
have clarity on the form of brexit. not enough to say that brexit means exit or hard or soft exit. the referendum itself was a four month period in which those who notht oto leave did outline what that leaving the take. what it involves staying within the european economic? those things are not sorted off. ans not far from appalling state of affairs, but i think it reflects the anxiety at the lack of leadership following the financial crisis and the sideways movement of the economy for 10 years. we have not seen this before in the u.k. a very disturbing state of affairs. francine: thank you so much for joining us. the director of the national institute of economic and social research. now, these are your markets. we are seeing pound still tumbling, britain facing a hung parliament. unclear what the course of
approach for anyone trying to build a government will be at this point. what i'm seeing yen and gold definitely decline. this is what we are seeing, the state of affairs. plenty more analysis from westminster and what it means politically for the markets and, of course, economically. this is bloomberg. ♪
francine: you are watching bloomberg "surveillance" live from westminster. of course, we have everything covered. let's get an update from downing street. matt on the trading floor of credit suisse in lodon. first of all, it was quite an exciting evening. give us the figures. who can form a government with whom? nejra: well, at the moment we have only got some three seats left to go and the conservatives own 315, labour 261. projection saying the conservatives could finish with 318 seats. of course, that is short of the 326 majority needed.
the question now is what happens? we have got a hung parliament. what sort of a government, a minority government coalition, might the conservatives for m? the most likely option seems to be some sort of alliance with northern islands dup -- northern ireland's dup. we were expecting theresa may, still the prime minister, to speak at number 10 downing street in a few minutes time. that has since been denied. we do not have any intelligence on whether she will be speaking here and went> -- and when. jeremy corbyn has spoken to a victory speech and to u.k. tv, it seems that he and theresa may have been giving suggestions that they can sort of govern the u.k. it's a big question over what is going to happen here and what sort of government we might see formed. itncine: yeah, nejra, can take two days or a couple hours,
can it take longer than a week for anyone to be able to form a minority government with which they can govern? at's right. th'at the airng is also up in in terms of when all these things might happen, and also, of course, what this means for the brexit talks going forward. the other thing, of course, is that theresa may is already facing calls within her own party to resign. jeremy corbyn, the labour leader, you would expect that for him, has also called her to resign overnight. there are big questions over whether her position is tenable. if it isn't, what happens and who might be in line to take over from her. we have been hearing the possibility that could be boris johnson, the foreign secretary, michael fallon, philip hammond, the chancellor, amber rudd the home secretary who has come to the fore since that terrorist
attack in london saturday. but also, another possibility the brexit secretary david davis. francine: thank you so much. let's get straight through to matt miller on the credit suisse trading floor. it seems like a lot of investors are taking this in their stride. seeing a bit of movement on the pound but otherwise fairly relaxed. matt: yeah, and the pound actually seems to be in wait and see mode now. that is to say we hit the session lows around 7:45 after the hung parliament headlines crossed on a number of different media. there was a lot of selling. all of a sudden the calm activity we saw overnight started to pick up and you saw r trade,ume in the cable which is the only place you saw a lot of volume. even euro gdp did not trade that much compared to cable. cable did not trade that much
compared to what we saw over the brexit and trump elections. i should point out i spoke with the head of european strategy at credit suisse. ehe said he expects a month the power struggle for conservative party to decide who is in charge and then decide which direction they want to take. uncertainty really is the name of the game. here right now. that is why a lot of people are trying to square off their positions before they figure out hopefully figure out what comens when theresa may fronts of numbero 10 downing street tout in from her in today's trading session. francine: matt, do you think there's a sense in the markets that brexit could not happen? do you think there is a red herring where market say we are going to get a softer brexit or no brexit at all? stubbsell, i mean, alex
did say that earlier. possibility, more than a possibility it was 24 ago. more likely what you are hearing is there is a chance of a softer brexit. for example, if theresa may's conservatives have to make a coalition with the dup, we could see softer borders along ireland. so maybe we could see a softer outcome with a weaker hand on the tory side. you soe: matt, thank much. matt miller on the credit suisse trading floor. full coverage, our continues on the u.k. election. bloomberg "surveillance" continues with tom keene. we speak to pimco, harris associates and blackrock. ♪
the u.k. heads for a whole parliament as the snap election backfires. corbyn has called for her to resign. the tory leader will speak and an hour. she promised strong and stable but could we get a soft brexit? sterling slides amid the uncertainty that u.k. stocks rise with all site -- multinationals taking advantage of the weaker pound. this is bloomberg "surveillance ," i am francine lacqua in london. it has been quite a night, quite an unexpected night. there is a lot of things that can happen. we need to look at markets but also a couple of coalitions. this is the data, dollar rising, oil climbing. it is clear the u.k. vote is sinking the pound. couple of things
when you look at what market expectation is and there may be a red herring in people think, brexit will be softer because of this vote and maybe we will not get a brexit. when you speak to market participants, they think it is extremely unlikely. much to talk about and i am looking in northern ireland and scotland as being at the margin of great political interest. screen, weaker euro and oil having a tough go of it this week. the second screen, sterling is the story. we saw that abrupt move last evening and it sustains 1.2720. i am looking also at sterling-swissie as the british safe haven metric. quite through to record swiss strength but getting there. that, well like
done. the strategy backfires. theresa may says she will not resign despite her gamble to call an early election, leading to a hung parliament. jeremy corbyn has reiterated his calls for that, saying his party is ready to serve. the conservatives are on course to win 318 seats, putting the torres short. this is according to the latest bbc projection. market reaction has been confined to a slump in the pound. we are seeing a little bit of verizon on the ftse as a result. later.ill be joining me we will also be joined by miller, thed gina person that brought that first brexit case, a celebrity when it comes to westminster. .hank you for joining us
i think we have mike on the line so thank you for joining us from pimco. there seems to be a believe that this could lead to brexit not happening. is there any chance that is the reality? and: the people have spoken it is for a brexit from the single market. it is not about the brexit that the main tories were talking about. francine: they have not given them a majority for anything. gina: i think brexit is such an important issue i do not think it should be anyone party. have, itok at what we will be over the majority. it will not be a hung parliament but an effective opposition from people who are against a hard brexit. this is about stopping a hard
brexit, that is with the people have spoken for. francine: when you look at pound unclear, but it is when our markets looking at this for? are they thinking, what happens next in terms of brexit, negotiations will be stalled to give more breathing room? >> i think everyone is confused because we have increasing political instability that raises domestic risk premium, and that is being shown in sterling. ,here is an overarching factor all of this rise in political uncertainty is happening as growth and uncertainty are returning to the eurozone. from a currency perspective i think it is bound to have consequences for eurosterling. regardless of what the endgame -- from the pressure in sterling and the pressure from
eurosterling. francine: the government was saying that this is really a vote against austerity. is there any truth to that? that would change your perspective if you realized it was a vote not on brexit but on austerity? >> i do not think it is clear that this is a vote against austerity. i think it is a clear vote, as gina says, about being against a hard brexit. i am very much in line with this. i don't think that all of this is likely to chains forecast. forecasts.e i think sterling goes lower. francine: mike, what is your take from what happened in the ?ast 48 hours good anything happen? mike: we would argue that the primary vote was an
anti-austerity vote and the secondary consideration was brexit. the reason we say that is because corbyn and the labour party campaigned on an anti-brexit ticket, and that was the party that won the seats. we would say that was probably the primary thing that we were thinking about and that makes sterling a bit more complicated because sterling on the one hand has the political risk ramy a -- therefore -- premium a premium. theou get a shift between policies things become more nuanced because if you bring , i think it is reasonable you have seen a dip in sterling but we would not expected to timber under the pressure. tom: a lot of political hysterics in the hour, not only
in washington but in london. let's bring up the chart. this is the euro safe haven 2007 and here is a structurally strong swiss franc versus sterling. over here is brexit, june of last year. the trend is your friend, what are the ramifications of weak sterling? is it an indicator of inflation in the united kingdom and ultimately to nominal gdp growth and that animal spirit? mike: that is a very good question. managedlation, u.k. has to achieve above target inflation. the issue is how much of that will come through in second in high wages and high cost pressures? so far there is very little sign of that. if you look at wage growth in
the u.k., it has been flatlining for the past seven years and seems independent of the unemployment rate at 2.5%. we would not expect there to be a big upwards and sustained drift upwards in inflation, but the fact that sterling remains on the back foot holds up the import price effect and at least for monetary policy, the bank of england has to look at that. they have an economy which is close to full capacity and they should be focused on it. i have highlighted it and will continue to. tom: this is cable, pound sterling to the u.s. dollar, it looks the same as the one we just looked at. the financial crisis, down we go -- this is brexit, i am sorry, june of last year, and down we go. this would be the breakdown we would see. does investment flow into the united kingdom with a weaker
sterling? my dollars are worth more, my euros are worth more, or is the political turmoil we have seen so great that that theory goes out the window? view, the is the bearish view on sterling is the money will turn up to finance the current account. so far i think we have not really seen that. international investment in the gilt is pretty stable. things like property obviously is the other obvious one. the equity market is the mirror image of the currency so that tells you that people are willing to buy sterling assets, i think, in the event that we come under further pressure. to view sterling as being under a lot of pressure from here, you have to start to think that people lose faith in the infrastructure of the general policy framework for the u.k. and i think we are a long way from that so we would not expect a big letdown.
gina, we were talking about financial and financial engineering and inflation but if we focus on getting back to the politics, who among these three names could be prime minister in the next two months? theresa may, boris johnson, and jeremy corbyn. be either one of those that will be prime minister. we need to now progress this brexit in a way that is sensible , and perhaps what we now look at is an all party brexit committee which is almost like a parliamentary committee that you would see for any other issue, which would be far more reasons in the way they approach brexit. francine: who do you think will be prime minister? gina: i think it is so open. aprilay, on the 19th of
was looking at the majority. her performance has been abysmal , her reputation is on the floor , and surely she cannot be prime minister. francine: thank you, gina miller. we will be back. tom: a lot of surprises last night. up, nicke just waking clegg out, mr. gordon out. coming up, to give us perspective on london after the historic election, mr. bauder of citigroup. from london, from parliament and new york, this is bloomberg. ♪
the trump administration as firing back at james comey. the former fbi director accused president trump of lying in a set a hearing and hours later the president refuted the claim that he demanded loyalty or directed comey to back off the investigation of michael flynn. president trump has proposed that secretary of state rex tillerson mediate the standoff between qatar and a saudi led coalition. qatar may view the president's offer skeptically. he sent out a number of tweets that appeared to back saudi arabia. the house has voted to roll back major parts of dodd-frank. it would accept banks from stricter regulation and would give congress more authority over the consumer protection bill. global news 24 hours a day, powered by more than 2600
journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: we just had a tweet saying they are expecting theresa may to visit talking him palace in about two hours from now to see permission from the queen to form a government. pa talkingording to to downing street. let's get reaction from downing street. talk about what we know the prime minister theresa may will do today. say, we have just had that news breaking from the press association that theresa may will go to buckingham palace at 12:30 to ask permission from the queen to try and form a government, after we were expecting her to be here at number 10 downing street about now. would bee reports she
giving a speech around 10:00 u.k. time. those have been denied by her conservative government. we have still about three seats left to declare and the conservatives are clearly 313 261., labor on the best the conservatives could expect out of this would be 318 seats, short of the majority so what we are looking at is a hung parliament with the possibility of a coalition of some sort. how that would form and what makeup that could be still unclear. francine: thank you so much, nejra cehic. let's get back to my gamy, a portfolio manager -- mike amy, portfolio manager from pimco. when we are talking with gina, you seemed to suggest it is unlikely that theresa may are -- theresa may can stay on as prime minister.
are we going to see volatility on currencies and on gilt when and if she steps down? >> i think we are going to see volatility one way or another because given the outcome and the uncertainty about negotiations as far as how brexit negotiations will proceed, and the endgame will remain very elevated. from that perspective i still think we are going to see a pricing in of high risk premium, in the gilt market as well as sterling. tom: our morning must-read, there is a lot out in the literature today. from bloomberg view, therese raphael, assuming the prime minister achieves a new trade deal with the european union and a smooth exit in 2019, bloomberg intelligence's forecast is the u.k. economy will still be 2% smaller than had it remained in the e.u.
may simply fought a negative campaign. is the united kingdom going to be in recession because of this vote? i will tell you what, tom, first of all, the u.k. parliament was also undergoing a significant squeeze in real incomes on the back of stagnant wage growth and the pickup in inflation. right now what you will have is an increase in political instability, which will further deteriorate sentiment. to the extent that we will see further sterling depreciation, this is going to lead to further increases in inflation. i am quite skeptical. i am quite concerned that the u.k. is going to go through a very prolonged period of slowdown. whether there is a recession or not, will be a matter of history
but i'm quite bearish for the u.k. economic outlook from here. francine: mike, what is your take on this when you look at the political scene at the moment? it seems anything but strong and stable. how much of a headache is it for the bank of england and mark carney for projections and inflation? mike: it makes the gdp forecast that much harder because the last time we had a political shock we all expected growth to slow down and we did not see a slowdown. there is undoubtedly a wider range of outcomes that you can see now relative to 48 hours ago. that is a headache if you are a central banker because on the one hand you have this above target inflation, pressure on sterling, and a wide range of outcomes for the economy. i think what you will see as you will see them trying to guide us to expect us to sit on the sidelines until we get clarity. we have been waiting for clarity how the brexit
negotiations will pan out and what that will mean for growth. this just puts a higher uncertainty premium and i would expect to be on the sidelines. tom: the epsilon goes up for every global equation. parliament, wonderful of them to join francine. , we will drive forward with the international relations and domestic relations for the next prime minister. maybe it will be robin netlist, he is with chatham house in this hour. this is bloomberg. ♪
tom: from the green and ,arliament, and from new york francine lacqua doing her mary poppins imitation. she may blow away. a little bit of wind in london. john mickelthwait, we were up on night looking at this. here are two names you need to know. one is nick clegg of the liberal democrats. i don't even know where this is on the map. sheffield hallam, right down here, this is the first time it is labor since the 19th century. that is a huge deal. and then we migrate up as we can only do on the official surveillance map, up we go to this district, which is gordon,
and this is alex sammon who has been on the show many times. he went from 40 some percent down to 35%. there are two names, they are gone. francine: they are gone, and both very significant. well done on the geography. they kind of distilled the rise and fall on certain people we held as beacons of politics. seeing, iat we are think we are getting a little bit of breaking news. theresa may said to be in talks with the dup to keep the tories in power. it seems like they are the only ones they can govern with. what happens if she needs to step down, to the markets? ,ike: if she needs to step down if she cannot do a deal with the dup i would not be surprised if it gets to that point, i think the markets would take that
badly because then you would go into way period of protected uncertainty and you would get a minority government. i think the government is looking for a deal with the dup and the dup has been saying they are willing. let's not forget that leaves her with a very narrow majority so they get 318, the dup at tennis 328 so you are tight on the dup at 10, gop -- 328, so your tight on the majority. francine: we will be back with david haro and robert harrison. ♪
i have to say we have our troopers. it couldn't be a more british friday. is suggesting theresa may has reached a deal with the dup to remain prime minister. the gilt yields edged higher along with an uptick in the ftse this morning. that move is largely down. the performance of sterling, sterling did take a hit. probably not a hit as big as we were expecting. big losses for theresa may's conservative party. joining me right now and braving the weather, i cannot tell you how uncomfortable, david harro and rupert harrison. us.k you both for joining . quick comment comment rupert, you are chief of staff for george osborne for years.
how does it work, is it frantic phone calls from 6:00 this morning? rupert: i think the important issue is the coalitions and minority governments are crucially dependent on the numbers. the first rule of policy is you have to learn how to count, and the interesting thing about this is that a minority conservative government supported by the dup is really the only result. the numbers do not stack up for anything else. i do not think this is a complicated deal with there were still be a little bit of arguing about what do we get to keep you in place? francine: they cia to i, they both want brexit and a pretty robust -- they both see eye to eye, they both want brexit and a pretty robust exit. these two parties are pretty similar on the general outlook for the economy.
the non-irish border with the issueic, one interesting is the customs union. obviously staying in the customs union makes that border issue of a lot easier. those are the kinds of things i think the market will be watching. tom: this is important, i hope you can hear me this morning. about, is the dup still a protestant party or is that a part of reverend paisley and the artifact of history? politics in northern ireland is still basically delineated along the sectarian divides, but the subject matter of northern irish politics has become more normal. elected on the basis of public services, taxation. normal a relatively
political environment. the party structure is the same one that we had decades ago. tom: get the umbrella out of your face so i can see you. come on, don't get wet. demand from the tories and conservatives? do they demand boris johnson's job? how does this work? rupert: i don't think this will be a formal coalition, i think it will be a minority government and there will be arrangements for tivo it's and an agreement -- an arrangement for key votes. i think there will be a quid pro quo. i think there will be some shiny new hospitals and schools and northern ireland and the dup will have their say when it comes to the brexit negotiation.
even if they can put this deal together, this will be a friary fragile, very -- very fragile, unstable government that will lose a lot of votes so we are not looking at it at a big majority or a smooth ride. francine: you show up and are here to buy banks or not, and you have the best of what the u.k. has to offer, great weather and a stable government. does it change your perspective on how to invest? david: given our investment time horizon, this creates some bumps for the u.k. economy. the lenders and banks like the less credit expansion due to uncertainty. this is just during this very small, interim period. we have to look at the whole big picture of a business, and if it value ofthe present cash streams from perpetuity to today, these are bumps and bumps
the next couple of months and next quarters, yes. if we see adverse share price movements down that might be an opportunity to add holdings. francine: because of the weakness in pound as well? david: sterling is already trading undervalued on a fundamental basis, fundamental being judged by not just today but over 3, 5, 10 years. sterling is not expensive, if not a little undervalued. you have an undervalued currency and some businesses which share prices may be getting hit, which will lead to almost a double undervaluation, but there is no reason to be aggressive because of uncertainty. share prices will continue to bounce around until more uncertainty is borne out. tom: rupert harrison, a deadly serious and tragic question. i have been amazed over the last
few days how little they has been in the british press about the association of three terror events with this election. is that the correct approach, do you have to link those three tragedies into this election or are they removed from what we observed last night? rupert: i think they may have played a role. distracted the subject matter from what the conservatives wanted to be talking about, which was mainly brexit. particularly in the last you days they threw a spotlight on to budget cuts for police. theresa may had been in charge of the police as home secretary but i do not think that was the big picture story. the big picture was a poor conservative campaign. the youth vote turned out for the first time really ever in a british election. probably most importantly, that brexit message the conservatives were counting on to bring home the voters was not as effective
as people thought it would be. i think politicians have learned that lesson and we see people looking at softer forms of paidt, sometimes you get to own the risk and they open up by opportunities and if we have a softer brexit this could be a buy opportunity for u.k. assets. tom: can david cameron come back? david: no. francine: next question, tom. david: sorry, he is just not a member of parliament anymore. he is writing his memoirs. i am sure maybe his comments, if he chooses to comment, it will be noted he is not a player in this situation. tom: you guys are troopers to join francine this morning.
with his public service to the united kingdom is with blackrock. equities, bonds, currencies, commodities, all in the vix, 9.93 shows the equity strength. i am looking at sterling swiss franc, 1.2370 as well. 1.2731 as well on sterling. is sterling again and there is the u.k. 10-year, three basis points lower yield. from parliament and from a rainy new york, this is bloomberg. ♪
bloomberg surveillance. the woman accused of leaking a top-secret u.s. report about russian hacking has been denied bail. a federal magistrate sent reality winner took classified information that could be passed to america's enemies. linguist whoer works for a government contractor and has pleaded not guilty to espionage. the pentagon successful interception of a north korean missile is the most successful test yet. designed to defeat long-range missiles from north korea or iran. china is easing the economic pressure on south korea. korean companies have quit complaining about doing business in china, and the south korean just doubled the number of flights to china. all of this is happening after south korea's president
suspended a program that china complained about. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. there is game seven of a baseball world series that goes right down to the clock. sometimes a sporting event delivers the goods. in politics yesterday, washington delivered the goods. testimony of mr. comey to the senate intelligence committee was riveting. there were any moment -- and a number of high moments. >> the administration then chose to defend me and more importantly, the fbi -- d fame importantly the fbi saying the workforce had lost confidence in his later. those were lies, plain and simple. tom: mr. comey yesterday. joining us now with a little bit .f sleep, kevin cirilli
i was thunderstruck by the response of the white house president'sth the personal attorney as well. what is the dynamic with this new person at 1600 pennsylvania avenue, and the rest of the staff. he has become the point person with the pressure probe. from their perspective this is little more than a political battle. they feel they got what they wanted, which there is no evidence or a politicized debate over whether there was obstruction of justice, and likewise that the president is not personally under investigation. democrats of course pouncing on this and continuing to criticize it. i spoke with several democrats after the hearing yesterday who told me they feel there is enough evidence for an obstruction of justice charge. regardless of what politicians
are saying we will have to wait until special counsel comes out with their findings. tom: i agree. what did you learn within the leaks that occurred during a closed door session? what has leaked out from yesterday afternoon? kevin: there is some conflicting reports and i think it speaks to the broader issue of leaks in general. they arestill going -- still going to be talking to people like jared kushner. i am hearing that is going to happen eventually but there is no set in stone timeline for that. in terms of where this is headed, it comes down to when and how the results of the pressure probe will be made public. senator lindsey graham has a bill to increase russia sanctions.
that is going to be a topic of conversations that the senate will have to take up this summer. tom: kevin cirilli, im am sure we will see you again this morning. in london, david harro and rupert harrison. whatever the report yesterday was for morgan stanley, a really subdued auto sales. the president is looking at a slowing economy that just cannot get going. associates look at the auto industry globally. are you seeing a global slowdown indicative of not only an economic slowdown but a toyota or ford or gm slowdown? david: actually, the global auto industry is in fairly decent shape. the u.s. is coming off its peak but it was just that, the u.s. auto industry had robust growth since the crisis and now we see a little softening.
you do not see a hard landing so far and given the state of the consumer and increasing employment, you will not see a hard landing in u.s. autos, and the european modern -- european auto market is doing well. , despite thet e.m. chinese have taken away some subsidies, that market is hanging in pretty good. the only place you see a little distressed and autos is in the u.s. where there is a little more competition, but this can almost be expected given the selling level the u.s. market had. the memoshow much of and leaks and testimony as we had yesterday will be a distraction for your republican party, that they will focus on that and try and defend or understand what the president of or hasn't done instead pushing through reforms and infrastructure spending? david: there has been a lot of distractions and i think the house and senate are trying to stay focused on health care and tax reform.
i think despite these distractions you will see an effort to push these reforms through and these legislative priorities through. walk and says, we can chew gum at the same time. we have to see that happen. they have a majority in both houses and yesterday they passed a dodd-frank repair in the house , had a tougher time in the etc., with mrs. warren, but i think they are realizing that in order to be successful they have to not get distracted by what is happening within the trump administration. francine: are equities in general a little bit frothy? we had this testimony and nothing really great came out of it. we have the u.k. election and yet we are seeing record highs for a lot of indices. rupert: everybody is feeling a little bit queasy. the valuation seem high and yet
the market continues to grind on. i would agree there is pockets of weakness like autos but consumers are pretty much in good shape. we expected a slowdown in demand and that is an upside when it comes to capex and substituting until wetle bit of -- get -- until we see some concrete risks, it will be hard to know. tom: it is an unloved bull market, is that what you see anecdotally, there is no exuberance? david: people don't want to be confident in the stock market -- and the stock market has not done well over the past six to seven months. evaluations are little bit stretched and i think they are assuming we will continue to have some economic growth, but the evidence suggests the growth will be there which should fuel earnings.
we should be japan closer to trough earnings than peak earnings. u.s. earnings are little bit better so maybe a little less earnings growth out of the u.s. companies, but these valuations to some degree globally could be supported by the fact that we are near a trough in the earnings cycle, and especially in europe which has been waiting so long to see some growth and signs of life. it is pushing 2% growth, which is a lot for europe. tom: david harro and rupert harris battling the climate of london today. let me look at tv right now, this we talk about every day but today it is valuable looking into politics. you are at your trading desk, and harris associates, wherever, we have two charts where you can bring up in this case two views of swissie and you can take the charts from a. you can copy those charts over
"surveillance," tom keene in a warm studio in new york and we are in westminster, looking at the fallout from the u.k. election. we are back with david harro and rupert harrison. rupert, you were chief of staff to george osborne for many years so you know he sees politics like no other. theresa may may be planning to name cabinet ministers on friday and she will see the queen later on to see if she can form a government, minority government with the dup. what is the most surprising thing so far? rupert: relative to just a few hours ago, the surprise is that it is theresa may doing these things. a lot of people assumed she would resign, maybe stay on for three months after the brexit referendum. i think what we can say with certainty is she is not the leader of the party until the next election. whether she has enough support
to stay on as leader for the next year, this is still a very fluid situation and there will be a lot of discussion amongst conservative mps as to whether it is time for a new leader. francine: the most recognizable mps from the tory party, we have not heard from yet. i want to talk about investments is this week we had santander and the chairman speak to us exclusively after they bought banko popular. does this mean european banks are in better shape because we have severed the link between sovereigns and weak banks? david: this was a smooth resolution and all of a sudden this problem had been around, and it was resolved i think in a fairly eco--- equitable, economic fashion. santander used to be the quality bank 10, 15 years ago in spain and two days ago it gets bought for one euro. santander had to absorb popular
kevin: issues -- popular's issues, which is bad loans, but i think this can work and they can resolve these problems with weak banks. i think this is a positive sign for the european banking system. is catching up with david harro and deciding to buy europe. are they late to the party? david: i don't think they are late. . should have been earlier when there is political instability, the italian referendum, the whole greek problem is what put european stocks on a larger discounted footing then i think the rest of the world. investors just do not want to see through a couple years. they would rather behave as traders and as such they mess the big boys up, but given valuation and what is happening to earnings growth, or what
should happen, european equities are still selling at a measurable discount to the rest of the world when you adjust for what earnings -- where earnings are going. they should have been there earlier. who can time perfectly? tom: the rain stopped, you have got to run. harrison,o and rupert thank you for being troopers in the rain. he will not be in the rain, coming up we speak with willem buiter of citigroup. i believe we will start with the united kingdom. from parliament and new york, this is bloomberg. ♪
the prime minister, while she fights to hold her job, it looks like she has. she will beg for support of the conservatives in northern ireland. director comey goes behind closed doors to talk russia with senators. back to the united kingdom, prime minister may, or johnson or corban or francine lacqua, they have to observe pound sterling. this is bloomberg " surveillance," live from new york and on the green of parliament. i know you were not on the shortlist for prime minister, but can we assume that prime minister may will keep her job? isncine: we understand she likely to reach an understanding with the dup to form a u.k. government. what that means is anyone's guess. we do not know the nature of the agreement and we still need to be sure that theresa may has the support of the tory party.
she said for a very long time that she was not going to call elections and she said, i will call it elections to be able to negotiate with brussels with a strong majority, which he ended up not getting. let's give it a couple of days to see what happens and whether theresa may can stay on. we did see a little bit of pound movement. the pound heading for the biggest drop in a year after it emerged the tory party has fallen short of a majority. it is 10 days before brexit negotiations are set to begin. from players in brussels that this probably will not happen on june 19, but the market reaction was pretty subdued compared to what we were expecting. bonds,uities, currencies, and sterling this morning, a risk on feel on a friday.
lows,evated to recent 45.79. quotes, three sterling 1.2740. sterling's safe haven is 1.2389 on swissie, stronger swiss franc. francine? francine: the strategy backfired. prime minister theresa may says she will not resign despite her gamble to call an early election leading to a hung parliament. jeremy corbyn has reiterated his calls for exactly that, saying his party is ready to serve. the conservatives are on course to win 318 seats, putting the tories short of the overall majority according to the latest abc projections -- bbc projections. a slump and the pound and a rise in the ftse as a result of the
drop in the pound. , robin and wie llem. this was unexpected and it looks like theresa may after falling short of a majority, may continue to stay on as prime minister. robin: she was chosen by the party, not the country, a year ago in order to be the brexit prime minister to negotiate leaving the e.u. from desk for the united kingdom. -- for the united kingdom. she took that mandate in my opinion and tried to turn it into a mandate for britain. with an aggressive political agenda, she fell short and she is trying to go back to the person who focuses on the sensible brexit deal. boris johnson is not the person to step up and negotiate brexit. given the fact that she got a
pretty good share of the vote, at a huge failure in electoral strategy, she has got to play that role. francine: was this election a disaster for theresa may or for the tories? robin: it is a catastrophe for her reputation or than for the party. she took the decision, having said i will not do it. you only do that with the 20% favorability rating and to lose that during the course of the campaign, and she seems to have done it herself through the mishandling of the campaign. even a she gets to be prime minister for a while and negotiate brexit, i cannot see how she would last to the next election. francine: what does that mean for brexit negotiations? it is unlikely these negotiations will start next week. willem: they are certainly unlikely to start of the 19th as scheduled, and whenever they on thethey will be led
british side from prime minister theresa may, who doesn't have a mandate. lame-duck,ctively a and this will make it difficult to bargain hard. i think there is more uncertainty about the outcomes of anhat the tail risk immediate hard brexit is diminished. tom: there has been an experiment on the other side of the aisle, and that would be james callahan from the late 1970's. i remember the uncomfortable phrase the live love pack. confidence in supply, handshake coalition, callahan hated that deal. resentime minister may working with the dup?
robin: the liberals think of themselves as a nationwide party whereas the dup are really focused on northern ireland. i think a lot more scope for theresa may to come to a pragmatic deal to have the dup support her. we must remember, the northern irish vote is really polarized. the more moderate voices in northern ireland have been weekend. it will be pretty aggressive on its own targeted issues, but they are targeted in northern ireland. it is quite a convenient vote to the coalition, arrangement to be able to strike. tom: let's go over the i.s. .urve, 1921 frank knight obviously there is uncertainty. what does this political uncertainty due to the i.s. curve? do you assume dampened gdp within prime minister may's
coalition? willem: there is uncertainty but some of the tail risk, worse outcomes are less likely. is pretty hard brexit much i think off the table. a deferred hard brexit, sort of adjustment period, expectation period is a possibility. it is not from a economic perspective bad news. it certainly can increase, but the economy proves that improves because the worst -- improves because the worst risks have been diminished. thinkne: robin, do you people think brexit won't happen at this point? without explain the market reaction? robin: i don't think people in britain think brexit will not happen. part of the reason corbyn did so well as he lost the boil of
being somebody who might be anti-brexit. the criticism was that he did not campaign enough to remain in the e.u., so those labor voters who felt leaving was important could vote for corbyn being confident it will happen. may, she about theresa did not have a mandate for the hard brexit and certainly for the no deal is better than a bad deal line she was taking. ripthe u.k. elect to really -- elector early reflects more of a view of what people want. she has to deliver that. francine: do we know exactly what this country wants to be? willem: no, i don't think the country itself has a clue. there is no consensus. the only thing that has changed is that the nationalism is in scottishespecially
nationalism has got a black eye. the chance of this new independence referendum in the future,- foreseeable the united kingdom is more likely to remain united. tom: let's bring up the map, i love this map. this is wicked simple. buiter,bauder -- willem the power of the kingdom today, it is literally back to shakespeare. here is the northern ireland, they share the cards. here is scotland up here. here is alex sammon, he is gone, and gordon as well. what is the power they have in london this morning? willem: it is much diminished because the tories have not done that well in scotland since the 1980's or something like this. there has been a transformation.
the tories have lost nationwide that gained in scotland. the scottish nationalists have got a black eye. tom: willem buiter, great to have you today with robin niblett of chatham house. later in the hour, a conversation with roland rudd as we drive forward the conversation on the you knew -- on the new united kingdom. sterling is weaker this morning. from new york and parliament, this is bloomberg. ♪
we go over to google chrome, and here is a tweet a few moments lies, despite so much final vindication. comey is a weaker! leaker! from the president of the united states. i think the hallmark yesterday was the quiet of the president. thecine: it certainly was, president just waiting for the first time 52 seconds ago. we spoke to david harro, ceo of harris associates and a big republican donor and he says the concern with the comey testimony is that it does leave president trump under this cloud of investigation. when you look at the markets, it is whether this will be so distracting for the party that they will not be able to push through what they wanted to in terms of tax reform and the rest. we are here with robin niblett
of chatham house. how does this translate into geopolitics? is there a possibility that because of comey testifying and so many more questions about donald trump, the president will decide to be protectionist or will decide to have a bit of cheese -- disarray in geopolitics? robin: the rule of thumb is you have problems at home, you can find a way to distracted with events abroad. personally i do not think this is a white house or president that will play that card. he does not have a security establishment that will go with them. he has people that want to damp down what is going on a broad, and his main calling card is domestic. i don't think you will see a big pull off on trade or and upping the stakes with north korea. what you get is what you see
with this president, he doubles down. the bigger problem i think is what is left in the wake of his foreign visit, because people think they have license. we are looking at the blowout between saudi arabia, uae, qatar, a europe that is feeling slighted, and he is saying, i am back and the trip was fine. the more is the absence of presents and him getting overly involved. francine: was donald trump's comeyooking at the testimony? i would assume if they weren't it will not hurt any support for the president so the republican party will take no action. you brought that up because buried in the news flow this week is an informed quinnipiac poll. this is quinnipiac college at of connecticut, and they have a lot of credit with their poll.
that support seems to be drifting away. i believe the working number is 36% down to 34% support for president trump, and you wonder where the core base is and the tangential republican audience is after what we saw yesterday. robin niblett with us at parliament and in new york, willem buiter of citigroup. can we talk -- not talk politics? can we talk about something to do with inflation? janet yellen has a small meeting next week, i believe. bring up the chart. this is core pce and this is the vector of inflation that everybody has been talking about. here is the rollover in inflation, the last number. how does chair yellen adapt and adjust to the physics of these two vectors? willem: inflation barely has a
pulse. it is rising, in an underlying sense, probably still, but with growth as weak as it is and momentum, i think the case for aggression is clearly not there. theywill go on doing what are planning to do, have another rate hike, but this is definitely not an environment in which the fed will bear its fangs. tom: i want to congratulate you on your dampened nominal gdp feel over the past few years. are you -- is governor carney going to come to the rescue? within the dynamics of the bank of england, can governor carney assist whatever coalition we are going to get? willem: he will help, i think. tom: how? willem: by not raising rates despite headline inflation being
up from the weakness in sterling , and by holding off and being quite relaxed about whatever short run might be on the inflation front. theas a majority of that on mpc so he will be supported but does not have to do much. tom: we have robin niblett at parliament, willem buiter in new york, and kevin cirilli in washington. his tweet, there it is. his personal lawyer, the white house counsel, and eight others lawyers to be do not want him to do this. why is he doing it? kevin: i have spoken with several sources analyzing the president's twitter as a whole. in his tweet it uses the word "vindication.
statement -- the word we heard. so from the white house's perspective, a don't like it when he tweets and it is not on script, but that tweet he tweeted is pretty much scripted and that it is a repackaging debt in that it is a repackaging of the public statements he used before the testimony as well is what his attorney said. that is a legal tweet. francine: i like the way that you put that into perspective. what is the gop talking about today? will it be the tweet, the testimony, or how they can regroup and push things forward? kevin: members of the house freedom caucus will be releasing their tax principles. this is seen as an opening bid in terms of the part of theative republican party, but all
attention inside the beltway is focusing so much on the fallout from former director comey's testimony yesterday. the president will be speaking later today about infrastructure with elaine chao, but this was supposed to be infrastructure week. tom: a little going on. robin niblett, help us with the international relations we see. do you assume washington uproar drives to dampened gdp? robin: well, even the fact that the world's economy was relying on a bullish or strong united states, the net effect i suppose is going to have a somewhat dampening effect, but most people have sensed that global economics is working despite the political chaos. i think the point francine made earlier about where the u.k. stock market is this morning, relatively stable, we are
getting used to this upheaval and there are some underlying fundamentals that are relatively good, whether the euro zone economy or chinese economy. i can live with the unpredictability a bit longer. we know that the u.k. seems to be sticking together because the smp did not do so well, and that could be on the back of the referendum nicola sturgeon promised? robin: the smp can make the point that the number of seats they got last year was exceptional. the real problem is the fact that the referendum gamble, putting a second referendum on the table is gone and they will struggle to overcome it. for 10 years, education is worse. you are not delivering smp at home.
tom: to kevin cirilli, one more question. docracy hashe pun suggested that republican senators yesterday were a little bit tepid in their support of their republican president. to those senators have the president's back? rubio,i spoke to marco and they are frustrated about what they see as a dumb mistake at best, in terms of what president trump did in his communication with former director comey. they cannot wrap their head around how those conversations could even take place. that said, they are now having to defend him against the cause of obstruction of justice. i spoke with a senior republican aide who said, we worked this hard to get a republican-controlled house and senate and white house and this is the predicament they find themselves in.
tom: kevin cirilli, thank you so much. no further tweets in the last 12 minutes. green inlacqua on the front of parliament. the prime minister will meet with the queen, that is certain this morning? francine: we think it is certain. this is what we understand from a spokesperson, but this would be convention. if you have a prime minister that does not automatically have a majority government you need to go to the queen and say, we can do some kind of agreement with this party, a minority government. it is just one of the u.k. quirks. theresa may has reached an understanding with the dup of northern ireland, we understand, so let's get straight to downing street. in westminster there is quite a lot of commotion. i think there are veterans from northern ireland, someone from greenpeace. downing street--
is much more quiet but what do we know about what the prime minister is doing? quiet,absolutely more there is more security and we are yet to see any appearance from the prime minister. the latest we are hearing from bloomberg reporting, theresa may is poised to form a government with the northern ireland -- northern irish dup party. the number of seats that conservatives have one in this election has fallen short of the 326 majority, so a coalition of some sort is needed. arises, what happens if we get this conservative dup coalition, and what that means for brexit. northern ireland did vote to butin in the brexit union, the dup has been calling for a frictionless border with northern ireland and a comprehensive customs and free trade agreement. is that mean we will get a
softer form of brexit? francine: thank you so much, nejra cehic at downing street. at westminster, quite a lot of commotion behind. normal to have certain groups are factions giving us their message. robin, what does this mean for the brexit talks? jean claude juncker saying the u.k. should not postpone brexit talks, so the clock is still ticking and the longer we do not have a strong government the least likely that the u.k. gets a good deal. robin: it is so hard to see forward how this will play out. there is a hard end to this. if you put off the start, you really need to try to complete in two years because the rest of the e.u. has parliamentary elections and they cannot still have the u.k. in the you -- in the e.u. confusing the vote.
while they might need a next her five to 10 days to get themselves in a row, i think -- leftmay left pretty a lot of wiggle room. she could get going quickly i think, after two to three days, to get the government going. tom: robin niblett and willem buiter with us. ,oming up on bloomberg daybreak sterling moving, not near the lows of 1.20, but getting there. stephen say well on the dynamics of pound sterling. from parliament, this is bloomberg. ♪
what a week it's been. the prime minister will meet with the queen it 12:30 p.m. london time. that is 7:30 a.m. in new york. francine is it parliament. -- at parliament. roland is with her as well. strong feeling of linkage with europe. we digress from a terrific news flow to try to drive to next week. there is no one that are to do that with. chair yellen has many great challenges. with the u.k. elections and on and on, is she central banker to the world? willem: the u.s. provides the only local reserve worth mentioning. she is central banker to the isld, whether or not there
u.s. domestic politics. importantially because we are unlikely to see things happen on the physical iscal side. the way the fed balances sheets is more important. the -- bring up the chart. this is the chart in an article. this is the balance sheet of the ecb, the fed, japan to their gps. this is a stunning and ugly site. how do you link the interest rate dynamic with the balance sheet and the desire to bring that balance sheet in? is the cart attached to the horse? are they separate western mark -- separate? willem: it's political.
it has nothing to do with monetary management. ratesn't cut interest anymore. once you are away from the balance, the fed can lift the balance sheets. rates, minimize the rates and at the same time shrink or expand the balance sheet. tom: that means inflation. it means rising wages. it mean some tendency toward potential gdp. is anything like that going to happen in our lifetime? willem: it's likely to remain miserable in the u.s., less than 2%. we may get a little lift from the regulation. that may be in the pipeline. infrastructure, it will be limited and not enough to provide a significant boost did inflation, i used to
remember what it was. it hasn't been in an advanced economy in so long. given what you were just talking about with tom with the treasury and the world see withnd what we janet yellen, does the world economy care about exit? willem: absolutely. the u.k. is still 4% of world gdp. the eurozone is a big player. the manner in which it happens may hold indications for the future of the eurozone. even if there is no in norma significance directly to what the deal is, the implication it carries for reform in the eurozone, it's possible for the first time with the franco german relationship that has
been reestablished thanks to the election. i think the world cares. been an economic surprise across the board. they managed to sort out the problematic spanish bank without involving the taxpayer, which is almost unheard of. it is an active inside and political judgment. the eurozone at the moment looks good. francine: we are here in westminster with roland rod. if the world cares in the world does the result of the election mean we will have an easier or softer exit? -- brexit? option that the conservatives took off the table which was our membership is now back on.
in 2015 when they won the election, they made the commit -- commitment. they have this rebuff. i would say that now in the new house of commons, there won't be a majority to come out of the single market. i think there is reason for optimism. francine: if they have this alliance, this minority government with ireland is confirmed. one of the positives is the eu has three conditions. that border if it sticks effectively between the u.k. and the republic of ireland sets a model for the overall framework agreement for the rest of the eu. the du p could force through a deal in that space in a way that ties theresa may to a sensible deal. i am less up a mystic about the
u.k. remaining part of the single market. that is going to be difficult to square. francine: if you have people and this is a tit-for-tat for the single market, where we going to brexit? roland: i'm not saying it's easy. voluntarily taking the best deal off the table. why would you do that? the selection is putting it straight back on the table and we should try to negotiate something that allows us to stay in the market. the conservatives wanted a deal that gave us all the benefits of a single market. the best way is to remain a member. tom: you are open britain. you were one of the leading bonuses on a soft -- voices on a soft exit. did the political calculus change last night? debate on open
britain this morning? roland: really open. first of all, we had a huge number of volunteers and organizers in the selection going into a number of key constituencies in terms of supporting pro-europe. the other thing we must not lose sight of is where the conservatives did very well in scotland, there is somebody who wants to stay in the single market and once the closest possible ties to europe. it's about security as well. reasonsthere are real and we can get a much better deal. tom: i guess the turnout was there. the young kids it showed up as well. did the young written's one open britain? did they want to be isolationist? roland: they wanted open britain. they learned the lessons of the
referendum, which is you have to have your vote. you have to register and you have to use it to they have done so in droves last night, which i think is splendid. robin: i think the problem we had for staying in the single market is you've got the two main parties who are now solidified in their majorities. both of them are committed to leaving the eu. part of the reason the labor vote was able to pick up is because they felt they are in favor of exit. that's going to be very difficult. the possibility of a decent frexit is much -- brexit is much increased. bignd: labor did not make a commitment to come out of the single market. they said they wanted all the benefits of the single market. tom: synthesize this for us.
the idea that jeremy corbyn, they are not really eurocentric. shift in theonal united kingdom to a younger britain, they voted. what do they want? willem: it's clear that jeremy corbyn is not unrepresentative of many of the younger people who have enthusiastic support. tom: did they vote against prime minister may? willem: i think they voted for jeremy corbyn for his economic and domestic program. brexit was an issue in this election. we've got to get in front of the debate here in he's not going to tell me about what he's going to write about this week
in. would you ask robin what he is going to write about at chatham house? i am going to give him a multiple-choice. will you write about theresa may? will you write about northern ireland or will you write about how the eu deals with this? they just put out a such -- statement that says the situation in london need to clear up. i think this debate we are having here. how does she interpreted? i think most eu members think britain is out. good riddance. where is the negotiation going? worry what i'm going to about. -- write about. they are our friends. we need to move forward. tom: i love how it is pouring
it appears she will be able to hold onto power a day after her party lost its majority in the snap election. they have reached an agreement with the democratic unionist party that will allow her to form a government. president trump is claiming victory after james comey appeared on capitol hill. twitterident said on total and complete vindication. comey accuse the present of lying about the reasons he fired them. he also said he wrote memos about their conversations because he feared the president would not tell the truth. a northagon intercepted korean missile. 36 million dollar system of radar command links and atterceptors is designed to be long-range missiles from north
korea and iran. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. francine: thank you so much. haveg up shortly, we daybreak americas. i know you have had very little sleep looking at market moves. once the latest? jonathan: the only thing looking's marker -- better is the market. it is a balancing between the pessimism of this outcome. on the other side, the optimism of a softer brexit. just imagine trying to watch this. we will have two policymakers weighing in on that debate. the lack of clarity they have and how you set monetary policy for the next two years. tom: let's go to the
surveillance map. let's bring it in right now. this is the map. this is birmingham right here. this is over here. pharaoh.e is the land they always go labor in coventry. jonathan: they do. the? is if they would go conservative. whether they would turn toward the tories. what strikes me over the next 24 hours is there is no real clear narrative as to what happened here. the prime minister wanted to make this a one issue election. this was anything but that. francine: everything but. jonathan ferro, thank you very much. let's get reaction on the u.k. vote from the rest of your. this is what we know so far. tohopes written is ready open negotiations and that there won't be any delay.
a spokesman for the german government said the plan has not changed and that theresa may has the real issues. let's get back with our guests. willem. york, we have let's go to you first. if you are a ceo and you're looking to invest in this country, through m&a or open a new factory, the pro is the weaker pound. you don't know what this country becomes politically. roland: there is some uncertainty. there was always uncertainty beforehand, there was not a proper debate about the outcome. is the now am -- have best possible outcome. there could be some short-term uncertainty, but it will be much better long-term economically for britain. francine: why have a debate when the clock is ticking? it has been triggered.
you only have two years. majority, amall thin majority voted to leave the eu. we have no idea what type of arrangement we should have going forward. the idea that before hand we were going to leave the single market and it was going to be a hard brexit, that has been rejected in the selection. we are in a much better position to negotiate something that is much more favorable for britain. francine: can you say that with certainty? do we know what was rejected and what was taken on board? robin: i think the uneasiness about the united kingdom with uncontrolled immigration from europe, that is not gone. this is going to be an underlying problem with whatever deal comes up in the end. underlyingthat uncertainty which is going to play all the way through. at least now you know this government is going to have to negotiated deal which has to be
approved by parliament area it will -- parliament. you're are going to have to go back and show the deal. theresa may is going to have to be a lot more open and straight with the british people. it's going to have to reflect the balance of the country. realis certainly the details that they will listen to. tom: let me join the conversation and a rip up the script at the same time. i believe the french president has his first elections this weekend in paris. that seems to be working out for him. how is the momentum? robin: the momentum is proving remarkable. he has been incredibly disciplined. they were putting this team together a long time ago. they had there on the ground analytics. they were the insurgent party
from the moderate side. that is not something we've seen so far. france's unique. the parliamentary parties tend to be vehicles for their leaders are in it it's not like britain where they go their own direction. i think it's positive for brexit. you want a strong eu to onotiate unfavorably with a -- unstable britain. rowland: we can't become place in about the attraction of paris. this is a former investment banker who is going to push forward labor reform in france and make paris much more attractive financially. i'm not saying london is going to lose its position. it does become more competitive. if we just throw away our rights, we will damage the city. tom: plus the escargot is better. give us the dynamic of the new united kingdom with the
netherlands and france as well. formm: clearly, whatever exit takes and i don't think we are to have the softest possible breakfast -- briggs it. -- briggs it -- brexit. it will have to continue to build on a strong relationship with its natural allies in netherlands, the scandinavian countries, and france. they need to hope with the leadership provided i the french merkel, you will be able to get the eu reform that a way that makes it easier for them to interact with britain. they will be more on the periphery, but not detached from europe. who with the eu want
to negotiate with? i don't know if it's correct to ask who they would want on the other side of the table. who would be the person you innk would be their favorite the realm of possibility or reality? willem: they've gotten used to misses made by now. i don't think you want to talk to poor's johnson. i don't think they are particularly keen to talk to a labor leader. i think misses may is as good as it gets. -- three some may is as good as it gets. she may not be around much longer. i want to summarize what we've learned in this week read earlier this week -- week. bill gross joined us. you brought up something you have written on excessively.
bring up the single best chart. this is simple. this is the inflation-adjusted two year yield down here. it has been negative since the beginning of the financial crisis. i believe this is called financial repression. when does it end? bill gross says it's going to be there along time. willem: it is not financial repression. tom: o, come on. willem: it's unpleasant for retirees. it's an equilibrium out,. there is investment weakness. this is part of the secular picture of the low to negative risk-free rate for years to come. that's not going to change unless you get much faster growth and much higher investment rates. tom: this is a huge deal for savers and retirees in america. i am off my podium here.
hear the you can helicopters circling above us. we are less than half a mile from downing street. , it is herjaguar jaguar. we expect her to go see her majesty the queen and we're expecting the prime minister to tell her majesty she can form a government. robin: yes. i think it will be a relief to the country if she can do it. people would rather work with the uncertainty around theresa may than the uncertainty without her. there has been enough chaos in the united kingdom. francine: how long can she last? more legitimacy. she got the opposite. roland: she can last, but in a different way. she has to embrace the reality
of the new parliament and be much more accommodating and she's got to be much more open. secrecy, notthe knowing what's going on all the time. she will understand that to get the vote to the house, she is going to have to make some big changes to her style in terms of the actual content. remember to always there will be a vote in the house of commons. does have a very heavy brexit. ofand: you've got a number conservatives who want to remain in the single market and have been reelected. the ones from a scotland are very keen on that. to, she isng to have going to have to rely on opposition voters. that does require a compromise
you don't normally get. tom: this is been fabulous. thank you so much to our wonderful set of guests. special thanks to the people who drove forward our coverage of the united kingdom election. let me do a report. sterling, sterling, sterling. we look at dollar yen. the euro is 111. there is sterling, 127.57 this morning. stay with us through the morning with more. the prime minister meets the queen. ♪
short of the majority. the government, the city of london stares down the prospect of messier negotiations. continues, james comey and the president accuse each other of line. from london, good afternoon. -- to new york, good morning. i am alongside david westin and alix steel. we are getting you up-to-date on the market action. we have a weaker pound, down by 1.55%. the real story is this is localized in very isolated, elsewhere there is not much action. futures are better. yields are up by two basis points at 220. alix: you see a