Skip to main content

tv   Street Signs  CNBC  June 27, 2016 4:00am-5:01am EDT

4:00 am
4:01 am
4:02 am
we had the surprise win for the people's party on sunday. this election meaning that there's a lightness we're seeing in spain that given it was the safer votes for many out there. conservative government that they knew. trading lower for the ftse 100. this morning we came back a little bit. we moved more toward that flat line. we just moved a little bit back again on the ftse 100. let's look at the sectors in trade this morning. we have three sectors trading in positive territory. health care, utilities. oil is back down around $47 per barrel at the moment. some dipping into these particular sectors travel and
4:03 am
leasue u leisure off. you have a profit warning coming through from easy jet for third quarter. shares hitting three-year low in that particular stock and profit warning from the property sector hitting that sector too. banks off by 4%. you heard earlier the u.k. chancellor having underlined that he's been in steady contact with the governor of the bank of england over the weekend and with other global leaders as well talking about potential support for the markets in need be. the stock -- stoxx 600 you can see the drop-off that we've had in this particular sector since the results came through on friday. so a huge drop after that. we continue to just try to figure out what's next, what's the next move because
4:04 am
essentially also you can look at these central banks, ecb, say they are willing to pump more money and willing to come through with more supportive measures if need be. they said that for quite some time now. the question is will it make any difference in the longer term and how do we get out of it. we need to get out of this at some point. when looking at sterling, massive drops happening again on friday. one-week chart you're looking at. huge drops in sterling. and this morning we're just looking at a level of around 1.34 in cable trade. that's what we're seeing an hour into trade, guys. >> thank you for that. very interesting. run through the movements that we've seen in the markets this morning. two things become immediately clear here. one is that we have a
4:05 am
reassertion of that domestic selling pressure rather than international selling pressure. so the 250 is doing much worse than 100 at this point which i think is perfectly rationale given how economists have been coming out downgrading expectations on u.k. growth. the other thing that i just want to highlight is how stability has returned around a number of asset classes and when you and i sat down here this morning, we were 1.34 on cable and we're 1.34 after three hours. there's stability around the markets. >> behind that is utter chaos going on there. downing street. milbank labor party headquarters. in financial markets, the markets worked on friday.
4:06 am
the prices were moving around aggressively. foreign exchange markets have seen volatility more than equity markets. they reset on friday. when i look at the numbers today and you mention sterling there as well, i look at the ftse and at these indices and you would say a downtick but nothing great. we look ahead to u.s. and maybe yellen speak or something. we had resale on friday and we have economic, political, social turmoil still to come but the markets i think have performed heroically and done a really good job of resetting expe expectations and moving on completely that they were completely wrong footed. 70% of brexit. how they got that, i will not know. we said it beforehand and on friday and i say it now, i
4:07 am
thought that was bonkers. it was complacent and yet the markets despite that have behaved beautifully. high hat off traders and investors. there hasn't been panic. rationale trade. >> and osborne spoke this morning at the treasury. he also said he's been in regular contact with bank of england governor mark carney to ensure market stability. osborne said britain should only trigger article 50 once there's a clearer view on future relations with the eu. he also defended himself against calls for his resignation. >> i've got a very important job to do which is as chancellor to speak to international investors, to speak to my counterparts, to do what i can do stabilize the british economy. that's what people would expect of their chancellor and that's what i'm 100% focused on and
4:08 am
will continue to be focused on in the weeks ahead. >> just to come back to the ftse 250, we've seen it extend declines through the session so far down more than 2%. let's get another voice on this story. market strategist at ads security joins us live from abu dhabi. give us your sense of how these markets are behaving? does this feel like rationale and orderly selling in the 250 and in some of these other european indices? >> good morning. thank you for having me today. of course. the first panic is already priced in. we saw last week on friday a major sell-off in all global equities today if you look at the asian session today, we've
4:09 am
seen support or some sort of leg higher. i guess this is one of the reason of why we've seen upward is because of reassurance of the central bank chiefs including japan and also bank of finland and also maybe the fed will see in the next few days or next few weeks. i guess right now after this panic that we've seen, there will be a short-term or maybe stabilization as well as dialogue or reassurance from central bank chiefs and market will stabilize at some point but downward pressure will continue but it will be gradually and not in one-way trade. >> so what are you watching in terms of catalysts to step back into the market in a bolder way? do we need to see beyond the reassurance from central bankers? do we actually need to see a rate cut here in the u.k. or
4:10 am
perhaps mark carney making a commitment to buy assets? >> i guess by saying reassurance, the market may not even react that much to it. so far we've seen some sort of reaction. central banks or especially bank of finland may need to cut rates at some point maybe at the end of this year especially if there's a lot of reports right now saying that the u.k. or the people in the u.k. voted to go back or slide back into recession. so with this kind of things that might happen, i guess there might be more than a rate cut. might be increasing asset purchase facility again or cut rates even further. >> we saw on friday this huge sell-off. $2 trillion worth of assets were sold off. some might say it was indiscriminate. now that the dust is settling on
4:11 am
that burst of volatility, we have more to come, which assets have been mispriced by the market? >> i think safe haven assets. we haven't seen that much uptick in gold, silver or the one we've seen a huge movement in was the yen which was below 100. silver and gold is still underpriced with this kind of risk of the exiting of eu or u.k. leaving the eu. there's still a risk of more referendums in the eu. we have reports that scotland might be the next one to leave the u.k. and also france is calling for referendum so gold and silver are underpriced. that's one of the major two that we're looking for. >> great to speak to you today. thank you for your time on "street signs." good to hear you, sir.
4:12 am
let's move on to comments from the imf chief saying u.k. policy makers must move fast to reduce uncertainty after the vote to leave the eu. she said the u.k. will cause further market pain if it does not renegotiate a new relationship with the eu as quickly as possible. lagarde added although there was a brutal sell-off, central banks did their job and there was no panic. let's talk about other reaction we've seen. europe stands divided on the speed at which the process should begin. france encouraged the u.k. to start separation negotiations as soon as possible while the german leader, angela merkel, says there's no reason to rush this divorce. nancy has been with us in brussels all morning giving us regular updates on the
4:13 am
commentary. nancy, let's come to you. we seem to have a clear skism here about how long this process of divorce should take. >> reporter: that's right. you could argue that the countries with most at stake when it comes to divisive forces within their own nation talking about france wasting no time saying we need to hold our own referendum. those countries are keen to move forward. they want to send a very clear message that there's no easy ride to this divorce. it will not be smooth sailing for the u.k. or any other country that thinks they're better off outside of the european union. in early days, a clear device is emerging among european leaders as you point out and tomorrow when david cameron makes his first appearance in brussels since the brexit outcome, that will be a key question. how quickly are you going to move forward. for more input, i'm joined by
4:14 am
senior vice president over at tenaeu intelligence. we've talked about this debate. germany not keen to move quickly. others saying we can't waste time. who has the right answer? >> you have to find a solution in the middle ground. it's interesting that the meeting is happening in berlin with the president of the european council. you need to find solutions between two ends of the debate. the ones that want to move quickly and those that say let's not rush to conclusions. >> you point out symbol itism t are meeting in berlin first. over the weekend the foreign ministers were meeting. what does this signal to 27 members when you have groups forming here over the outcome? >> that's a trend we've seen
4:15 am
developing over the last couple years in european politics. the main message here is that intergovernmentalism. government in the eu bargaining with each other very often under leadership of angela merkel and that's kind of the new modest that we have seen evolving over last couple years and with britain removing themselves, we'll move right in that direction. i think there are competing forces here. some say that we need to consider this project as a single market and that's it. others and the founding members, foreign ministers meeting yesterday, say we need to hold onto the idea of a political union. the key issue for me is that nobody has really spent any time on thinking about how we move forward. they haven't done this in the past. they need to come up with answers now. >> what has the response before from the different institutions? there seems to be quite a bit of
4:16 am
confusion. you said the only certainty is uncertainty at the moment? >> nobody seemed to have been really prepared for this. the commission of course is the guardian of the treaties and pushes for closed integration. the european council has to be more careful because you have to make member states governments positions into account. the basic question that nobody is able to answer is how do you move to closed integration if you want to do that? >> how successful do you think the u.k. will be when it comes to negotiations outside of the eu specifically when it comes to the financial negotiations and idea of can you maintain some form of a financial passport if you're sitting outside? >> it's going to be very tough. first of all, what the u.k. has to do is it has to make up its own mind. it's not that people haven't been telling the british government about that beforehand. you have to make up your mind. if you want to remain a member of the single market, you have to accept freedom of movement and that means integration. that's the fundamental trade that nobody has thought about in
4:17 am
the u.k. they need to make up their mind about that first and that will determine how much they will get back in terms of economic integration. >> do you think the eu wants to punish the u.k.? >> the most federalist actors here in brussels but overall the real task is to find a balance that basically maintains economic ties but at the same time doesn't put the european project at risk. that is difficult and will take years to negotiate. >> talking about a very difficult balance that eu institutions have to strike here. it will be interesting to see exactly what david cameron has to say when he appears in brussels tomorrow. back to you for now. >> nancy, thank you very much indeed for that. let's talk a little bit about how some of the other markets have reacted this morning to developments over the weekend. the nikkei defied a larger downturn in japanese markets as
4:18 am
japanese prime minister shinzo abe instructed his finance minister to intervene in currency markets if needed. let's take you out to dan in singapore for a roundup of the asian sessions. dan? >> absolutely. really interesting session because what we saw was a surprise to the upside today. clearly the major indices shrugging off what was that global market sell-off in the friday session really treated by britain's shock vote to leave the eu. it continued into the close of trading day asian side. you mentioned japan. this has been a major focus for us today. nikkei 225 finishing up. we saw key automaker stocks under pressure because of the
4:19 am
stronger yen. 102.04 for dollar/yen cross and today policy makers including prime minister shinzo abe out in force responding to brexit saying they'll do whatever it takes to maintain stability and order. that suggesting to investors that intervention could potentially be on the cards. nikkei 225 lost 8% in friday session in aftermath of the vote. jgb yields also fell. the question now particularly across asia is whether we'll see an intervention if we see continuing yen strength and analysts suggest that it could very much be a possibility. back over to you. >> dan, good to see you. thank you very much. now one year on from the mdp scandal malaysian prime minister has made a slew of new cabinet appointments marking key step in his political survivor after the
4:20 am
controversy around the $681 million payment between the country's development fund and another fund spain's little parties set to slug it out once again after a failure to secure an outright majority in yesterday's election. we'll assess the country's options in a minute. also, corbyn defiance. we'll digest one of the most dramatic weekends in britain. "street signs" will be right back.
4:21 am
4:22 am
4:23 am
>> hi, everybody. welcome back. you're watching "street signs." people arriving at 10 downing street this morning for a cabinet meeting. a lot of negotiations set to take place over the next coming weeks one would assume given all of the uncertainty now that the u.k. government is dealing with. not just the prime minister having stepped down from conservative party but also 11 ministers having quit here over the weekend from the opposition labor party. almost all markets trading in negative territory except for spain at the moment hanging onto some green after the spanish election result yesterday. we'll come to that in a second. let's add in 12% selling we saw on friday. maybe people stepping in and getting back in thinking it might be oversold at this stage. ftse, dax, all lower in the region of a percent. lower than when we started trade this morning.
4:24 am
we've just reversed a bit and we're just seeing a bit more selling. the u.k. 30-year guilt yields hitting a record low. down eight basis points on the day. we've seen record lows being hit in a number of yields and we continue again to try to figure out what exactly the bond markets are telling us at the moment whether it means we're not going to look at any type of rate hike in the future. that seems to be the message as of now. talking about spain getting back to what happened over the weekend. case of deja vu last night after a second general election in six months failed to yield an outright winner. the popular party once again received the most votes but fell short of an overall majority. the socialist came in second place with far left coalition ending the night in third. now, the acting prime minister declared his party's right to
4:25 am
govern following the results. >> translator: we've won the elections and we'll claim the right to govern because we've won these elections. we need to be useful for all spaniards for those that voted for us and those that didn't. >> we're joined by an economist at cunef. good to have you with us this morning. what do you make of the result over the weekend and do you think they'll be able to have a government in place within a month? >> good morning, everybody. yes, i think there will be a new government from the popular par party. they won the election with over 14 seats in december. the weekend has been hard. the polls were wrong were saying
4:26 am
that the communist party coalition was surpassing not just the traditional left party, socialist party but also maybe the popular party but finally it seems spaniards have voted and maybe it's not the best solution. it's much better than any other solution for sure. >> the populist party, the anti-austerity party, they've been arguing that pp has been discredited by high unemployment and austerity measures that have been put in place basically. pp says that economic performance we've seen in spain is proof that things have been working under the government of
4:27 am
rajoy. >> i think that economy growth is affecting spain. spain is the most important economy in european union at the moment growi ining at a higher . i think that even if some corruption have bepeople have b thinking about and alternative was much worse than maintaining and keeping them in government. of course i'm not sure but brexit election on thursday was a good point to think about.
4:28 am
it was made before the brexit and they didn't take that in focus. i think something has to be studied. >> thank you very much for being with us this morning. juan manuel lopez-zafra from cunef. >> it doesn't look like the u.k. is in a position to negotiate with the eu and it appears to be boris johnson, the favorite to replace david cameron following his decision to back the leave campaign. allies of cameron and his chancellor george osborne are reportedly plotting and anyone but boris for prime minister campaign at this point. >> the truth is people were not told the facts.
4:29 am
people were invited to believe that we could gain the ability to prevent migration from the european union into the u.k., freedom of movement of labor and that we could somehow go on enjoying a fast growing economy and high levels of prosperity. we are going to have to make difficult choices over the months ahead. i hope that now the campaign is over and people are able to reflect on these things in the cold light of day that many people, not all, but many people who voted for brexit will now start to think about what they want brexit to mean. >> we thought abb was a swiss swedish engineering company. anybody but boris. new acronym. co corbyn says he's not stepping
4:30 am
down. lewis takes on the role of shadow defense secretary. it is important to have as much stability as you can at such an uncertain time. we have lost a prime minister. a man who said he would serve two terms. he didn't quite make two terms. it appears -- i think this is a bonus for the market. whatever you think of george osborne, most of the government -- i'm hearing soothing words from boris johnson and george osborne. let's be honest. let's hope the ruling party, the conservative are not at war with each other and issues over europe can die down quickly. they promise this vote in order
4:31 am
to be aggress in the rulive in party. >> if we compare where markets are with politics in the u.k., politics are still intense. we've had most of the labor opposition front bench resign and then as you pointed out, jeremy corbyn said i'm not going anywhere. here's a new labor front bench. and clearly there's a lot of intense infighting going on in the conservative party as people jostle for position to become the next prime minister. in contrast, when we look at the markets this morning, there's actually some stability now around the currency and stability around u.k. stocks and in fact we saw the japanese market higher through the trading session and the italians said they'll pump 40 billion euros into their banking temperature is. >> it's better than 5 billion they did last week.
4:32 am
i'll give you an example. ftse traveling at lows for the session. it's down 71 points. it's taken all morning to get there. we got to down only 12 points at one stage sending message out to producers we could go flat and that was the kiss of death and it's taken hours for it to draft 60 points. that's how markets work. let politicians do their shenanigans. >> thanks, everybody, for tuning in. we'll say good-bye to you from here. steve and myself will be back with "squawk box" tomorrow morning. >> are we here? >> remains to be seen. >> "street signs" continues after this. back to you. >> thank you, guys, for your shenanigans. get some rest. we'll see you tomorrow morning bright and early as usual. i'll continue on with more shenanigans here.
4:33 am
coming up, moody's downgrade. we'll hear on why they took that particular decision. you're watching "street signs." we'll be right back. and then thought to himself, "no, i shouldn't have done that." [ crash ] and doctors with real-time data at their fingertips asked, "how a man your age could do this to himself?" before any of this, cdw orchestrated a point of care solution using the lenovo x1 carbon yoga with intel core processors. connected health care by lenovo. orchestration by cdw.
4:34 am
4:35 am
hi, everybody. welcome back to a special edition of "street signs." we're equipped for whatever happens. george osborne tries to limit the selling on the ftse. the banks see another day of red as jpmorgan stays defensive on the sector. home builders losing their footing. politics in turmoil t. the fight begins to replace david cameron while corbyn
4:36 am
replaces his cabinet. and it's groundhog day in spain. hi, everybody. welcome back. just checking in on european equity markets an hour and a half into trade we were called lower across the board hanging onto that selling not by as much as what could have been feared though they're lower than we were at the beginning of trade on our european equity markets. ftse off by 1.3%. smi still to the downside. you have the ibex down a smidgen. and we've been talking about whether or not this could have
4:37 am
to do with people deciding to vote for what they know and conservative establishment having seen what happened here with the brexit vote at the end of last week. i just want to mention that goldman sachs falling by 5%. goldman says stoxx 600 is falling. more downgrades and for various other sectors. banking sector in particular very exposed to downgrades from the likes of barclays saying their earnings per share risk to the downside and jpmorgan downgrading a bunch of european markets. cutting price targets on more than 30 banks to be exact. speaking of 30, different type of 30. gilt yields hitting record low down eight basis points on the day. meanwhile, the u.k. ten-year gilt hitting a record low as
4:38 am
well. that's what we look at when it comes to debt markets. interestingly, the u.s. ten-year yields dropping to around 1.5%. on friday we hit 1.4%. we're very close to that record low in the u.s. we hit a record low of 1.38% back in july of 2012. so buying of sovereign debt still seems to be the name of the game at the moment. let's look at some of the sectors and what's going on there. the construction sector. the house builders. still seeing a lot of selling. taylor wimpey is off and when looking at state agents as well linking to this sector giving profit arrange earlier on and that stock dropping 12% on the back of the profit warning. speaking of profit warnings, ea easyjet issued one as well. they say brexit exit and fuel
4:39 am
price movements are expected to increase cost base by 25 million pounds by the end of the year. iag trading lower on this news, too. off by more than 15% now. moody's downgraded the sovereign outlook. they say economic effectiveness might be diminished as a result of the vote. cnbc spoke to the head of the rating agency and asked him what moody's expected would happen during britain's eu exit negotiations. >> we expect the u.k. will reach an agreement with eu that it will trade in the way it currently does. if it doesn't, we will see a short on economics. if it does, growth will come back. we expect to see growth of around 1.5% this year and close
4:40 am
to 1% next year. not looking at a recession. what we'll see if the u.k. is not able to agree to the kind of trading arrangements that it currently benefits from in the eu is sustained materially low growth over the median term and that would be bad for the u.k. >> let's go to john. good to have you with us. as we sit here a world away from each other, might be interesting for viewers to hear what you guys are talking about in china. what's the view? what's the reaction been to the brexit vote? >> well, thanks for having me on. as you would expect, brexit is dominating a lot of the conversations here. you know, i think the view on that is this is first and foremost a matter for the british people. they voted. they decided. having said that, clearly i
4:41 am
think concern about the uncertainty that this creates as we go forward certainly short-term volatility around currency and markets but maybe more significant questions around how does this exit work and what kind of negotiation will we see over the next two years? >> are people rooting for quick decision on triggering the actual exit or is the thinking we need to see a negotiation around the way with regards to all of those other issues including immigration, freedom of movement, trade ties, all of the other things that need to be figured out along the way as well. >> you know, i think what people are really hoping for is that there's some rationale discussions and rationale negotiations on all of those points. obviously a lot of concern. i would just say on the heels of
4:42 am
some of the concerns created by brexit, we've got some more optimistic news in the form of a global ceo study we just released here a few minutes ago in tianjin. more optimistic in terms of the next few years the group of ceos that we surveyed talking about their confidence significantly higher than it was a year ago when we conducted this survey about the economy and more importantly the company's ability to transform and be successful in this operating environment. >> but the study must have taken place before we saw the result of the brexit. wouldn't that change how a company ceo is thinking about the environment? >> you know, it was a very current survey. it was before the actual referendum. but frankly the debate around brexit was very much on the minds of the ceos as we were
4:43 am
conducting this survey and i think a number of them obviously would depend on their view of whether likelihood was stay or leave. i think some of the uncertainty about a possible brexit was factored into a number of decisions and you see that in the results of the survey because much less optimism in certain areas. when we ask about the 12-month outlook as compared with a three-year outlook and that's the one we really pay attention to. that's the one in terms of decisions ceos are making today about how to transform their business and how to use technology to really take advantage of the growth opportunities that they see. that's where i think we saw some really optimistic and upbeat expectations on the part of the ceos. >> sure. by default when something like this happens, when you have a country that breaks away from a
4:44 am
group of countries that otherwise have agreed to do something together, isn't the result by default that everybody starts looking more inwards and you end up in an environment where you have more protectionist way of thinking than you had previously and that in itself could dampen growth? >> yes. obviously there are a lot of social issues embedded here. if you're asking just from an economic standpoint, there's no doubt that we have businesses moving in one direction, which is globalization, increased cooperation partnering across geographies and not just in the u.k. with this referendum, we see increased populism which certainly is moving in an opposite direction of what i think business believes is critical to take advantage of the opportunities in the
4:45 am
marketplace today which is to get those barriers and boundaries out of the way both from a talent standpoint, sharing of information, et cetera, et cetera. >> john, got to let you go. thank you very much. our european equity markets are still trading a bit lower at the moment so we're off by 1% to 1.5%. we'll be right back with more after the break. more analysis, more ideas. we'll cross to the u.s. and talk strategy as well. we'll see you in a couple minutes.
4:46 am
4:47 am
hi, everybody. welcome back to "street signs." if you're just joining us, just glancing at some of the market moves we're seeing this morning. we are called lower on european equity markets. we opened lower.
4:48 am
sterling on intra session chart drafted lower off by 2.5% against the greenback. cable lower now. we were hovering around 1.34 level coming into trade and on top of that also to mention the banking stocks are being sold back a little bit this morning as well as we continue to deal with all of the uncertainties that we need to come to terms with. and should we show the gilt chart as well? we've gone lower in gilts in terms of yields and draw your attention to what's taking place in the states. we're close to this record low in yields stateside as well. buying into safe haven purchases as well. in sports, france suffered a scare against their last 16 match against the republic of ireland. fell behind in the second minute to a penalty but hid their stride hitting two second half goals in a matter of minutes to
4:49 am
put them into the quarterfinals. there we go. germany cruising into the next round with a resounding 3-0 win over slovakia. now that result never really looked in doubt with two first half goals helping them to set up a quarterfinal tie with the winners of spain and italy. belgium also dominating in their game against hungary running out 4-0 winners. hungary surprised opponents by topping the group stage but were no match for ever improving belgian side and last two remaining 16 game kickoffs this evening take place with italy taking on spain and surprise package iceland facing england. who do you think is going to win, adam? my director. england by how much? 2-0. let us know what you think. does iceland have a chance? sticking with football,
4:50 am
lionel messi called it quits on his international career after failing to win another major honor with argentina. the five-time winner missed the penalty in yesterday's copa america finale against chile. messi, who had a glittering club career with barcelona, said the national team was "not for me. i've done all i can and it hurts not to be the champion." david cameron's resignation is now leaving the world to wonder who will negotiate the u.k.'s exit from the eu? will it be boris johnson? he's considered the favorite at this point but allies of cameron and george osborne are said to be organizing an anyone but boris for prime minister campaign. things are not calmer when looking at the labor party right now. you have jeremy corbyn under growing pressure. shadow cabinet members have quit
4:51 am
in protest of his handling of the brexit referendum but the shadow chancellor john mcdonald is staying loyal to his leader. >> if he needs to stand again, i will support him. we have to show we can lead this country and we need to hold together to do that. >> now speaking to cnbc yesterday, the former labor party communications adviser summed up his views on the government turmoil while accusing the leave side of lying to electorates. >> you have a situation where the country has taken a monumental decision without a lot of people really having been clear about what the consequences might be. a lot of people who voted for it now realizing that they were lied to by those who campaigned. lies about money that was put into the european union. they gave the impression it
4:52 am
would go into the national health service and they didn't really mean that. lies about the way that we're going to bring down the number of immigrants and they didn't really mean that. meanwhile, the prime minister announced he's going to go off to a european summit this week to try to find out the rest of the european union will work with this. you have government in turmoil with leadership vacuum. you have the labor party in turmoil with leadership vacuum. and you have some really, really unpleasant stuff going on in britain as well. just going through social media looking at some of the racial abuse and attacks sparked by this. young children being sworn at as they walked down the street and told to go home. kids given letters saying we voted to get rid of you. are you gone yet? i mean really disgusting stuff that's going on there. >> the situation has been further complicated by scotland which voted overwhelming to stay in the eu.
4:53 am
scotland's first minister ambulance to go to brussels to talk to eu leaders and will fight the brexit vote in parliament. >> if we find ourselves in a position to look at the independents question, this is not a rerun of the 2014 referendum. the context and circumstances have changed dramatically. scotland voted to remain within in 2014 doesn't exist anymore. this is a case of how do we best protect the stability and the interest of scotland. >> one of the few winning trades in friday's post-brexit sell-off was bitcoin. we have an analyst now joining us from new york. chris, good to have you with us. this completely inverse relationship to brexit, how long is it going to last for, do you think? >> what we've been seeing with bitcoin is capital market investors use it as a disaster
4:54 am
hedge. we saw this summer of last year with greek debt crisis. bitcoin trading volume spiked and the price enjoyed a sustained rise. we also saw it late last year with fear of the chinese devaluing and we saw it with brexit this year as markets started to grow intention around a brexit leave vote, bitcoin spiked breaking through 700 but then as markets started to price in a remain during the week, bitcoin showed softness down to 550 and it spiked again as britain shocked the world and voted to leave and so i think we will continue to see capital market users really turning to bitcoin as a disaster hedge due to low correlation of returns with other capital market assets. >> a disaster hedge for
4:55 am
long-term or more of a disaster play in the short-term? >> well, so capital market users are using -- traders use it in short-term. i think in the long-term when you look at bitcoin's stellar returns and look at dropping volatility and superior sharp ratio to better returns for units of risk taken, it's been a great long-term asset. ark invested late last year. we continue to offer only etfs with bitcoin exposure and it's gone 5x for us and we see it as a long-term play. >> briefly, i think about bitcoin as a new asset class and if we are heading into an environment that becomes a lot tougher, one might assume there will be more regulation put on across the board including on bitcoin trade and maybe even the
4:56 am
viability of bitcoin. does that not scare you at this point? >> so it's interesting actually. because right now most of the trading volume goes through china and in conversations i've had with u.s. regulators and i heard friends of mine have in the space with u.s. regulators, some people are actually upset that the u.s. is not taking reigns regarding bitcoin. u.k. has progressive regulation around bitcoin as well. i think as people realize this value that bitcoin offers, i call it money over ip. voiceover ip revolutionized that so you see people even though bitcoin got a bad rap early on, you see people open up to it as an asset and i covered this recently with bitcoin as a new
4:57 am
asset class. >> chris, thank you for being with us. thank you. now, we've got just a couple minutes left here today in trade. the implied open stateside, we're looking at a negative start to trade in the states for all three main indexes. s&p 500, dow jones and nasdaq. our european equity markets are drifting lower. we'll leave you with live pictures of the palace in paris where the european council president will meet with president hollande a bit later. we'll see you tomorrow. bye for now.
4:58 am
4:59 am
5:00 am
good morning. millions of britain sign a petition to reverse last week's decision to leave the eu. >> meantime, the nation's government is in chaos what it means for the future of europe coming up. volatility ahead. global stocks suffering a brexit hangover as the pound falls further, oil prices slide and gold continues to benefit. >> all this plus the political ripple effects. hillary clinton bashes donald trump over his reaction to the brexit vote. it's monday, june 27th, 2016. "worldwide exchange"

46 Views

info Stream Only

Uploaded by TV Archive on