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tv   Street Signs  CNBC  June 9, 2017 4:00am-5:01am EDT

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welcome to uk votes, a special edition of "street signs." these are the headlines. uk election ends in a hung parliament as theresa may's conservatives fail to win a majority. the labour leader says it is pretty clear who won this election. >> country needs a period of stability, and whatever the results are, the conservative party will ensure that we fulfill our duty in ensuring that stability.
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>> the prime minister called the election because she wanted a mandate. a mandate she's got, has lost conservative seats, lost vote, lost support and lost confidence. >> saying it is in a dramatic falling sterling on the back of the election outcome. not the only thing that is going down this hour, uk housing starts and home builders losing their foundation on fears of a labour-led government with barclay, travis perkins and taylor wimpy near the bottom of the stock 600. >> with days to go until negotiations start, jeremy corbyn says delaying brexit talks is not a british decision. nigel farage tells cnbc he could return to frontline politics.
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>> if the brexit, the british people voted for, gets betrayed, i would have no choice but to go back into full time campaign. what happened last night imperils the whole brexit process. all right, let's bring you up to speed with what we know so far. is theresa may going or not? apparently she has no intention of resigning. she will attempt to form the next government. that according to the bbc's political editor sky news reporting that the conservatives have already started talks with northern ireland's dup over forming a coalition agreement, depending on the last remaining seats to be declared. an agreement with the dup could give may what she needs to form the next government. now, according to the latest count, the conservatives have 316 seats, labour, 261, scottish national party, 35, the liberal democrats, 12, and the dup, the
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democratic unionist party, 10. steve is in westminster, to wrap up the latest for us. steve? >> well, look, jeff, the latest is the same as it has been in the last couple of hours really, isn't it? the tories have failed dismally in what they tried to achieve. yes, they are the largest single party, yes, they are undoubtedly going to try to form a government, yes, it looks like the dup will be the main support. the aim here was to get a 50 to 100 seat majority, to give theresa may a very strong hand, domestically, with perhaps dissenters who are looking for a different kind of brexit than what she wanted. and, of course, internationally in her negotiations with europe. one might say she's in tatters. but we have been speaking to a whole host of people, john saying it is a good night for the tories because it is the largest party. i think many people will say that's putting a brave face. i spoke to john mcdonald, second
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most important person in the labour party after jeremy cor n corbyn, right-hand man, and i asked him what he thought about the prime minister's position now. let's listen in. >> it is not me saying it, it is across the political spectrum, a number of our own mps as well. i agree with our position is now untenable. i think she called an election unnecessarily, she put party before country in this election, saw her party as 20 points ahead of us in the polls, even higher at one point in time, purely for party advantage, and people thought that is inappropriate for a prime minister. >> and finally, sir, in terms of if mr. corbyn were to try to find a government, minority or whatever it would be, what would the style of negotiation be with brexit, where would you stand on things to access to single market? >> we need to change the tone of these negotiations. in my former life, i had an office in brussels, i was a negotiator with other european
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countries as well, the tone that we want to change it to is one where you have mutual respect and mutual interest. we have a mutual interest, access to -- access to the european market as well. that's the key element for us, protection of our economy, our jobs. i think there is enough room to maneuver around the whole range of other issues that will enable us to achieve it. >> do you believe the taxation policies of labour, of mr. corbyn will be good enough to keep companies and high paid international individuals in this country, though? >> the proposals we have put forward for corporations was to steadily increase them back to the rate of 26%, which was still below the rest of the g-7, so it remained extremely competitive, but, remember, also, that money was then going to be used to invest in our infrastructure, which would modernize our economy and enable as corporations then yes to secure profits and also to secure long-term stable existence in this country. >> clearly a very happy chancellor there, john mcdonnell.
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they did lose a third successive election, didn't win, just wasn't as bad as they thought. better than they thought it could be. is there going to be a return to the fray for nigel farage? uk had a dreadful night, possibly worse than mrs. may losing ground to the conservatives and indeed labour as well. does that mean that they need to change focus? will nigel farage be back in politics? he said only if it looks like brexit is in danger. but also spoke to nigel farage about the kind of brexit that could happen now, that theresa may has a weakened hand. let's listen to what he had to say. >> this morning, you know, we see cabinet ministers saying maybe we have to rethink leaving the single market or leaving the customs union. if the brexit, the british people voted for, gets betrayed, i would have no choice but to throw myself back into full time campaigning. >> do you fear that brexit as you envisioned it, as you worked for, it is in danger now do you think there will be a second vote potentially this year? >> i think what happened last
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night imperils the whole brexit process. i'm pretty upset about it. >> it is extraordinary, isn't it? many thought that brexit was done -- a torturous negotiation for the next couple of years or so. now some proponents think it could be -- you know, uncertain future. let's ask professor malcolm chalmers, deputy director general at russi, what his thoughts are now. malcolm, we were speaking earlier off camera about the rock that is so familiar, the tory government floundering and now may. why do the tories keep having this act of self-flagulation? >> in many respect the conservatives are a profoundly pragmatic party on the issue of europe they are not. ideological for so many conservative mps. we saw cameron two years ago achieving a working majority,
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and then proceeding not because of popular demand, but because of pressure from his own party to having that referendum which pushed him out of office. now theresa may repeating exactly the same cycle. >> is it right in your opinion that theresa may goes and thinks about her position now or that she actually tries to form a government with the backing of the dup and just carries on, but significantly worse position than she was in yesterday? >> i think it is possible she may try to soldier on for a while, but i think it is pretty inconceivable to imagine that she can be the british leader in the brexit negotiations because she simply won't be credible as representing a stable majority in the uk. >> who would be credible then? a tory or would it be somebody at the head of the minority government, possibly led by jeremy corbyn or another? >> i think a parliamentary arithmetic suggests the conservatives have to form the government, but the arithmetic
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also suggests that especially on the divisive issue of brexit, that conservative leader has to reach across the floor and get a broader parliamentary majority for what he or she is doing. >> if she can have a vote to -- to blow away the five-year fixed term parliament, surely very easy for that to be blown away again on vote after vote over the summer, and the autumn, and have another election, possibly by the end of the year. >> that's entirely possible, more instability and another election within next year is entirely possible. let's not forget, though, that before she called this election, the prime minister set the clock ticking on the brexit timetable, that two-year article 50 timetable, we already were three months into it and made no -- >> can we hold pause for a bit while we start -- that was -- in terms of the hand that the british population has, the british government has facing
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down what must be feeling very confident, michelle barnier, and other negotiators, is the hand weakened or not as much as some pundits have been saying? >> i think it is an opportunity for a brexit settlement, what people might call a soft brexit, which dilutes some of the red lines which theresa may unfortunately set. >> single market then. >> possibly. >> we will have the ecj? >> some of the elements, but not -- >> we will have free labour. >> what was it all for? >> that's a good question. >> thank you very much for your time. professor malcolm chalmers at russi. to recap, if we do have red lines blurred, jeffrey, and free movement and labour, ecj dominance and single market, i reiterate the question, to our audience, what is it all about? >> a little bit confusing, you have to say at this point. i want to bring in the other side. brexit talks, jeremy corbyn, the
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labour leader says his party would push for a jobs first brexit, that means prioritizing proper trade deal with europe. corbyn added it was clear who won the election and his party's ready to serve. let's get out to carolyn for more at labor hq and joined by downing street. some of the calls from corbyn that he might have won the election given he had 261 versus 31 216. he hasn't won. what does this mean for brexit? >> look, i think you raise a couple of very important points and i don't have the answers to any of them at this point because to be honest, we're just as confused as you are about some of the comments that mr. corbyn has been making this morning. they're ready to serve the country, we will do everything we can to put our program into operation, and he says parliament will have to take a decision on what happens when the government puts forward its program. it is very, very unlikely at this point that jeremy corbyn,
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the labour leader, will be part of any government here going forward because obviously first this is -- this goes to conservatives and theresa may to form a minority government right now. and then only after a couple of steps this could take, you know, weeks and weeks until the conservatives say, hey, we're not able to form a government, over to you, jeremy forbe corby form one. they ruled out forming a coalition with either conservatives or with the labour party. so it would be extremely difficult for jeremy corbyn to find or form any alliances here going forward. coming back to the comments on brexit, he said that the trade deal with europe is the most important element of the brexit talks, but so far in the campaign he's been pretty vague when it comes to the future of brexit. of course, a lot of people, a lot of voters overnight like the fact he wasn't as extreme when it comes to the brexit views, and he never said no deal is better than a bad deal, like
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theresa may did. but at this point, it is simply not clear enough what his strategy would be on brexit. >> carolyn, thank you very much. let's get out to villa for more at downing street. significant doubt who holds the keys to number ten, theresa may, someone else from the conservatives or jeremy corbyn. >> not fans in the conservative party of people that lose elections, we know that much from history. clearly theresa may on -- under a lot of pressure from members of her own party. the only one that publicly spoken about this, the former minister under david cameron, she said she should consider her position, one imagines the shock in the conservative party are circling in the water around mrs. may. we're expected to hear from her in the next hour or so. on brexit, clearly, she called this vote, said to strengthen her mandate, she suspects a much larger parliamentary majority, so she could outflank members of her own conservative party, who might have been slightly more in
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favor of not leaving the european union. she clearly hasn't won that majority. let alone that ability, that cushion to outflank members of her party who might have been in favor of remaining. so now we're left with the situation where as carolyn mentioned, we're looking at a slightly softer brexit as people -- a lot of analysts saying that might be long-term better for the british economy, in the short-term we're faced with yet more uncertainty. clearly in brussels people saying right now this does not look like negotiations could start as soon as june 19th, the deadline that michelle barnier set. we heard from giunta earlier this morning talking to german radio, saying the eu budget commissioner saying without a government there will be no negotiations. so a lot of difficult conversations for theresa may ahead of her in the hours and days to come. >> thank you very much indeed for that. interesting, sky, here in the uk, carrying a report that the northern irish dup are
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considering supporting prime minister may's conservatives through a, quote, confidence and supply arrangement. let me just explain that to you. a confidence and supply situation is one where the party agrees to support the conservatives on confidence votes, and on matters of appropriations. so effectively around taxation through supply votes. but for most other matters, would vote by conscience. so it is a limited -- it is a limited support mechanism, if you like, but could be sufficient to get the conservatives over the line. karen, to you. how are the markets doing on this? >> great day if you're a day trader. sterling, 126, at 32 at the low end.
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1 126.88. there is an argument that sterling has been undervalued for some time. risk event like today pushed the currency much lower. short-term there are signals for 1.25 handle on parliament quite negative for the trade on currency. keep in mind, longer term calls we're hearing is you might see yields steepening, positive for sterling trade. so i think short-term, long-term trade quite different on how you used sterling at this point. what has been clear if you look at it from one definitive trade on the market today has been around domestically focused stocks, sold down, more subsidiary on the ftse mid-250. what has been a trickier trade is ftse-100. 7535 was the high point for the stock market in the uk. we have come off that level. we peeled down to the point where we're up 40 odd points, so half of 1%. very big divide between the
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dollar and foreign currency at the top of the market. all the domestic focus names at the bottom, in particular the home builders as we have been flashing up this morning. a lot of selling pressure, some down 4 odd percent. we'll take a break and be back in a moment. when we come back, top bank analysts weigh in on the general election result. we'll bring you their comments. and recommendations as to how you might make money from this. we'll squeeze in the break. live-stream your favorite sport,
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at the airport. binge dvr'd shows, while painting your toes. on demand laughs, during long bubble baths. tv on every screen is awesome. the all-new xfinity stream app. all your tv at home. the most on demand, your entire dvr, top networks, and live sports on the go. included with xfinity tv. xfinity the future of awesome. welcome back to our special election coverage. i want to show you more stock trades and reaction to what has been a shocked outcome, hung parliament. the banking stocks in particular suffering here today. there was a view that certainty around brexit and stronger hand for may would be good for the banks, now the uncertainty really knocking some big names. still a view by analysts that a conservative led government would be more positive than a
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labour led one. that's what analysts are saying around the bank stocks specifically. if you see the extent, metro bank one of the upstarts is suffering the most, down more than 4%. across you're seeing a pullback, the exception the owners elsewhere, banks with jurisdictions focused on some emerging markets and other areas across the globe that stand chartered, hsbc. home builders to the bottom of the index on the ftse, eclipsing the losses on the banks has been these particular stocks. taylor whimpy down 4%. in lockstep, 3 as perceodd perc the other big names. think bigger picture when there is room to negotiate, a push on the property market about concerns for demand for housing. balance that against calls for market participants saying you might see a steepening of the yield curve, general uncertainty.
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want to take you to what is really the flip side of this sterling trend. you can see the companies that derive their revenue from off shore. bp rio tinto, drug companies trading higher as well. other foreign earners, diaggio, all in the green. back to you, jeff. >> thank you very much for that. just some comments from michelle barnier, he would be the chief negotiator for the eu and the brexit discussions here. brexit negotiations should start when the uk is ready. timetable and eu positions are clear. let's put our minds together on striking a deal. he says. we had various comments this morning from commissioners and others suggesting that the timetable remains the same until
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either party indicates that there are any significant shifts in that timetable. so we will wait and we will watch. >> it takes -- how long it takes to cobble together a coalition is the question when you count down to ten days to negotiations. but here has been some of the reaction, the uk's federation of small businesses is calling for a delay to the start of brexit negotiations. the nonprofit organization says the talks should be postponed rather than, quote, rushed to begin them in 11 days. really talking about ten-daytime frame. steven wheeler is with us. add up the numbers, talk about forming a coalition of sorts, minority government, that takes a little bit of time presumably. do you think brexit talks should be delayed to get the paperwork in order? >> no i think we should press ahead with brexit, i think what is business looking for? three things, this parliament to hang up the welcome sign, to european citizens, not take it down, they're looking for an
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outcome which avoids tariffs, between us and the -- our european partners, and we're looking for a program of investment in health and transport infrastructure. >> brexit title but no brexit in reality. >> it is brexit in reality as well. because the decisions lie with the westminster parliament for each parliament. it is no longer a commitment under the treaty of rome. >> just to be clear, you did run the strong er campaign, your colors are firmly nailed to the political mask here. what is the point of the whole exercise if we continue to demand single market access and give ground on free movement of labour. those are the two key issues around the brexit vote. if we have a soft brexit and no limit on migration, what was the point? >> it is a decision for each parliament, that's the
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difference, between what we had before, before we had a commitment under the treaty of rome. now, each parliament decides, so the next parliament will decide, i hope, open door policy, avoiding tariffs, but that doesn't commit the parliament in five years time or the parliament in 15 years time, that's what changed and that's what we're expecting the brexiteers, what they're hoping for. >> what happens to the financial community in the outcome you're looking for? we know many acts have organized plans to move facilities to luxembourg or to dublin. you think this would stay the hand of those deciding to move manpower out of the uk for the time being? >> i think so. i absolutely believe so, clear signals that for this parliament we want to work with our european partners, no commitment for the parliament after, but for this parliament, we know what we want to do, that would be wise government and that would encourage business. >> and the -- the issue of free
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movement of labour, we just give ground completely do we, we accept the untrammelled migration into the country from the eu continues. >> for the life of this parliament, no longer that. >> and do you -- are you not concerned that that may continue to create political instability in this country, or indeed difficult relations with other eu migrants. >> i think it is a wise policy for this country. it is clearly business, we need migrants, see it again and again. we may not need migrants in five years time, we may not need migrants in ten years time. the brexiteers, i respect their argument, they want the decision to be with the westminster parliament, that's what we would be delivering with the policies i'm talking about. >> pleasure having you in. thank you very much. steven is managing director at ti partners. a quick break, let's check out world markets live. that's the blog. it runs throughout the european
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trading day. we'll be right back, everybody.
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welcome back, everybody, to the special cnbc program. uk votes. here are your headlines. the uk election ends in a hung parliament as theresa may's conservatives fail to win a majority, while labour leader
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jeremy corbyn says it is pretty clear who won this election. >> country needs a period of stability, and whatever the results are, the conservative party will ensure that we fulfill our duty in ensuring that stability. >> the prime minister called the election because she wanted a mandate. well, a mandate she's got, she's lost conservative seats, lost votes, lost support, and lost confidence. >> plunges to a seven-month low against the euro. eight week lows against the dollar as investors digest the reality of a coalition government. >> uk housing stocks and home builders lose their foundation on fears of a labour led government with barclay, travis perkings and taylor wimpy near the bottom of the stock 600. >> with days to go until the negotiations start, jeremy corbyn says delaying brexit talks is not a british decision. a former uk leader nigel farage
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tells cnbc he could return to front line politics. >> if the brexit, the british people voted for, gets betrayed, i would have no choice but to throw myself back into full time campaign. what happened last night imperils the whole brexit process. i'm pretty upset about it. >> so as we have been reporting all morning, one of the potential outcomes here is that theresa may's conservatives get together with the dup in northern ireland. there is an opportunity for the conservatives to limp on here and theresa may to hang on to her job. apparently the dup leader arlene foster told bbc radio theresa may will find it, quote, difficult to survive as prime minister. this after the conservative party failed to get an outright majority. saying talks could extend into the weekend.
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meanwhile, john mcdonnell said the labour party stands ready to lead a minority government and is not looking for any coalition deals. let's get down to steve at westminster. you talked with john mcdonnell earlier on. and he didn't look like a man who seemed defeated. he seemed very much on the front foot and jeremy corbyn it seems to me thinks that they may actually have a chance here. >> yeah, i think they see a very short-term window where they can see where they can rattle the cage a little bit and for a little bit more fuel on the fire for the conservatives. no doubt about it, there are enormous questions that we are asking this morning as well as our market and economics questions, questions about how the british government can work going forward, domestically, how it can work internationally, what kind of brexit we're going to have. is there going to be a hung parliament which then leads to another election later in the year, will there be a second
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brexit referendum. but the short-term questions i think are all around theresa may and whether she has the confidence and very short-term from her own parties, the plp, ptp, parliamentary conservative party, key, and the influential back benches the 1922 committee who are key. john mcdonnell, i was speaking to him about the same issues the bbc was, they are ready to lead a minority government. i asked him about mrs. may's position. not surprisingly he was forth right about his thoughts on her ability to carry on. >> it is not me saying. it is across the political spectrum, a number of our own mps as well. i agree that our position is now untenable. i think she called an election unnecessarily, put party before country in this election, she saw her party was 20 points ahead of us in the polls, even higher at one point in time, purely for party advantage, and people thought that is
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inappropriate for a prime minister. >> and that the question being asked by as you say arlene foster, john mcdonnell, jeremy corbyn, the pundits around here as well. i put the question to a man who didn't have a bad night john who won his eighth election in a row. from berkshirt town, i said about the wounded position of the conservatives and the wounded position of mrs. may. he thought everything was rosy. listen in. >> i think we have enough seats to govern and the important thing is to do the brexit negotiations and you don't need to vote every day of the week on those. the government has to handle them and come back to the house of commons when we make some progress and she knows what she's doing. and the great news from the electoral point of view is that people either voted conservative or labor overwhelmingly and both parties said we must honor the brexit referendum and we won't be in the single market.
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>> we have spoken to john redwood about a whole host of financial market issues and about politics over the years. and i can't help thinking that was the bravest of brave faces from john redwood today and actually the knives will be out in some parts of the conservative party. we already heard boris' name being mentioned, 50 to 1 outsider before the election result of being the next leader of the conservative party. there are many there who might echo what nigel farage said to us as well today. he's a man who is talking about coming back into the fray, who might echo his thoughts, which were, well, you need a brexiteer to lead brexit. he said may's heart was never in it. whether heart was in it or not, she had a poor election and it led to a whole host of questions remaining for all of us. about domestic politics, about international politics, about negotiations, about whether we have austerity or more of a centrist tax and spend type policy. i don't know the answers to any
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of this. i don't know who does. back to you. >> thank you very much for that, steve. i want to take our viewers to the market action again. we have seen what has been a firmer day of trade for the ftse. in particular, 7496. we were above 7500. we have given back territory. .6% where we're trading. the dollar earners, currency markets up on the weakness in sterling and pushing up some of the dollar earners in particular. you see on the trade this morning, on the currency front, 127.18, 19, much higher than the 126.32 low we had earlier in the early morning session here. still down by 1.8%. sterling to yen, 1.5%. to the euro, 87.71 on the charts, 1.5%, weaker for sterling to the euro. there is an argument that valuation has been supported for sterling because it has been marked down so aggressively after the brexit vote.
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to gilts, there has been quick reaction from the credit guys out there and girls talking about the fact now that they think gilts should underperform. if you look at the way yields have been faring, a difficult trade, i think, you got to say. the action has been on the short end of the curve so far. >> why would they underperform at this point? i think you head back into the gilt curve, wouldn't you? let's get more views on this. joining us -- let me read this for you first. bank analysts issued reaction to the surprising uk election numbers. jpmorgan, the likelihood, ubs says a risk of euro skeptics gaining more influence and expect another election before the end of parliament. citi believes prime minister may is likely to resign though the reports say may has no intention of doing so. this is what i wanted to get to. richard turnhill joins us, global chief investment strategist at black croft investment institute. good morning. welcome. just your thoughts on this, because obviously the panic has
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been to sell sterling at this point, but we have seen buying into the shorter end of the gilt curve. >> great to be here. if you look at the market reaction this morning, i think you've seen the most of the price action taking place as expected in the currency. you're seeing sterling down, somewhere shy of 2%, both against the dollar and the euro. and i think that's actually pretty much in the middle of the range that most of the scenario analysis we have done and other people in the market 2% move feels about right. what you're seeing though in the broader market is importantly no sign of contagion to other financial markets, outside the uk markets remain supported by strong fundamentals. in the uk, you see this big divergence between the strong performance of the exporters benefitting from the weakness in the pound but the weak performance of the more domestic stocks which are pricing in at a high risk premium. >> the reaction across the curve has been steepen the curve. is that the right reaction? >> at this point, it is hard to
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know, to extrapolate the implications of this result for the bond market. so the -- if you look at the factors holding yields down right now, it is about that increased uncertainty, seeing evidence of the uk economy slowing. our own data suggests that uk is the only major economy globally, risk to growth over the next 12 months or to the downside. or all of that anchors down bond yields. what the market is trying to juggle with is putting that against some heightened uncertainty what future policy is going to be. we don't know what next government is going to look like. we don't know who the next prime minister may be. that's all going to change. and also the risk of another election down the road. so the market is trying to juggle these two things. i think fundamentals ultimately the key determinant and that suggests an environment where yields stay low for some time. >> here are comments from peter who we have spoken to on the channel talking about why you've seen a richness in yields,
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particularly ten-year, low on the volatility, but he thinks they are at rich levels in comparison to swaps. he says there might be a little bit of swap spread tightening on the risk of more fiscal stimulus, labour government, if they bring in any more loosening of the purse strings. even if it is not a labour government, the message has been very loud and clear, less austerity in the country. does that impact the yields in your view? >> i think absolutely encouraged to move money out of very low yielding assets where valuations broadly across fixed income, not just in the uk, but globally, do look rich. anchored currently by low short-term interest rates, but the market is encouraging to move that into riskier assets. i this i that brothink that bro trade continues. don't think this election result changes that. so moving into credit and in particular moving into equity i think is the right decision for long-term investors today. >> moving to equity, what has been completely ignored now as
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trade fell aggressively,years w uncertainty that could impact consumers, flashed up in the growth numbers we saw yesterday on the election day, ironic pointing to a percent on the growth rate. do you think that is the right trade or investors getting completely wrong again and that's just knee jerk today in terms of domestic news? >> i think the right trade is to focus on where you get the most leverage, most exposure to global inflation. i think that does suggest looking at many cases away from some of those uk domestic stocks. even before today's election result you're seeing some evidence of the uk economy slowing, we're seeing inflation picking up, starting to dampen consumer spending, implicati implications. if you look internationally -- >> if you get less austerity here and longer term reaction, we get less inflation, we also get more money in the pockets of consumers. are we going to be sitting here and saying, we kind of got it
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wrong after the election day, we thought there would be weakness in some of the names. we're revising our expectations. >> a lot of ifs in that statement, we just don't know if we get less austerity going forward. what we do know is we are seeing a global reflationary environment, moving into an environment of sustained -- above trend growth around the world, very supportive of earnings, interest rates will remain low. i think that's good for stocks broadly, but is better for stocks in the continent than it is here in the uk. >> you'll stay with us. we'll pick up in just a second, want to get in touch, get to us through street signs, come to us through twitter. either individual accounts or show accounts. we're going to squeeze in a quick break. we'll be back in just a moment. stay with us here.
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big tweet fest this morning on the back of this surprise uk election result. want to take you to the negotiator, brexit negotiator for europe, you have guy verhofstadt saying another goal after cameron, may will make complex negotiations even more complicated. i think more interesting, though, he's saying we don't know when brexit talks start, we foe when they must end, and he says do your best to avoid a no deal as a result of no negotiations. and coming up in 13 minutes time, theresa may's speech, will she repeat the pledge, no deal -- no deal is better than a bad deal. >> well done, guy, for giving the uk population another reason to dislike brussels. it is just unbelievable, isn't it? this is a democratic process that is taking place here. one would have thought anybody in the commission would have been pleased to see democracy in
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action. but hang on, some of those commissioners aren't elected, are they? maybe they don't like democracy. >> in recent days he wanted even less members of the executive arm arguing for a shrinking of the number of representatives on european commission. i think we know where his views lie on democracy. let's move on. reports say theresa may is expected to speak in the next 15 minutes after failing to secure an outright majority. the conservatives are eyeing up northern ireland's dup as potential coalition partners, but early indications show they may struggle to get the party on board. re-elected dup member of parliament nigel dodds told reporters his party could strike a deal if northern ireland is granted special status as a halfway eu member. we also had arlene philips talking about the position of the dup and whether they would be willing to work with theresa may, remaining as prime
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minister. villa is in downing street for us. carolyn is labour headquarters. what is your read on the dup positioning here? they want half membership, they no doubt will want some special deals with the uk government for their support. but apparently theresa may remaining as prime minister is not a part of that deal. >> no, arlene foster saying it would be difficult for theresa may to survive given her poor performance, that could just be a very aggressive negotiating tactic coming up to what i imagine would be a weekend of discussions between the dup and the conservatives about forming this minority government. interestingly, if you look at the tory records, since 1992, that last victory under john major, 25 years they had two years with a very slim majority in charge, apart from that,
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coalition, it doesn't seem like they're going to have obviously a majority this time around. not a great record for the conservatives. if we look through the negotiations in brexit, of course, you mentioned that a dup throwing up that potential issue of halfway membership for northern ireland, we have seen three months out of 24 months already, they have run down the clock, we're going to see another delay to the negotiations, we heard those comments from the likes of guy, from frederica, from giunta, all of them saying that clearly there won't be any negotiations restarted until there is a fresh government. if we continue running down the clock, it makes that brexit conversation that much more complex, that is something people both here and london and brussels are worried about. we'll hear from theresa may shortly. she's presided over potentially one of the worst political decisions in modern british history. and we're going to hear what her reaction to that is as you've said, though, the conservatives potentially rallying around her, potentially saying we had enough
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and moving on to a new leader. that could be more chaos here in domestic politics, though. >> thank you for that. let's get to carolyn then. all sorts of coming and goings over at the labour headquarters. what is the latest from there on what prospect they feel they have for forming a government? >> look, jeremy corbyn said roughly an hour ago he's happy, he's willing to serve the country. in what capacity he can do that, that's extremely uncertain. yeah, labour party could try and form a minority government but finding a coalition partner and getting enough votes to get bills through parliament, most importantly a very important budget bill, that seems to be the main cliffhanger at this point. we know jeremy corbyn will not be able to form a majority government, and that sense he has clearly lost. we know that -- on a personal level and party level he was the big winner of the night. very much a historic win for the labour party, given that under
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jeremy corbyn he delivered the highest increase in the vote since 1945 and 9.5% increase. he delivered the highest share of seats since 1945 as well, that's 1970 as well. we are expecting jeremy corbyn to come out of the labour hq in a few moments time, you'll see that many reporters are still waiting for him, he did make a speech in the middle of the night from his -- calling for the prime minister theresa may to step down. and he's made more comments about being able and willing to serve the country and saying that the brexit deal, a trade deal is extremely important. but what ultimately his negotiating strategy would be when it comes to brexit, that is very uncertain. we know that one of the lines he said is a -- he would invite angela merkel to an arsenal game, would it go beyond that at this point? we don't know. >> carolyn, thank you for that. richard turner is with us, black rock investment institute. you and i have both old enough
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to remember jim callahan's pact, the 77, 79 coalition. are we back to the 70s politics and with the consequent attractiveness or unattractiveness of uk-based assets? >> in terms of politics, one example we did have a hung parliament in 1974, and that did lead to a second general election. i think that's going to be in the back of many people's minds. i think this is a drag for uk assets, broadly. it creates -- domestic assets. creates uncertainty, important to remember the stock market in the uk is an international stock market, more than 70% of the earnings coming from overseas. i think the core issue around this election, though, is about the uncertainty it creates over brexit because we're on a very clear path before towards a hard brexit and now all options are in play, certainly increases the risk of crashing out of the eu without a deal, that risk is clearly increased.
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but also i think that the possibility of a softer brexit or even some discussion about the potential for there being no brexit at all, the possibilities are to a degree in play. that's what the market is struggling to digest. >> if you think before this election there was a lot of criticism about the opposition being a weak opposition, now after the show, jeremy corbyn, you got to wonder whether labour rallies around him. doesn't that mean more checks and balances here in the uk against minority conservative government? which in some ways would be welcome? >> i think it will be very difficult for a minority conservative government to get any meaningful legislation through parliament under this structure. and i think to some extent if we're getting positive economic growth coming through, and want a solid path, you know, that could be a good thing. >> i think the conservative would be having a weak government, at a time when we have some evidence of weakening growth and huge brexit uncertainty, that is what is
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going to drag on the markets going forward. i would highlight one positive, which i think is not -- significant decline in the smp vote is really very materially reduced the markets, perceived risk about a second independent referendum. that's perhaps one of the reasons you're seeing less volatility in the market today than you might have expected with this result. >> where does some of that money go instead? emerging markets? u.s. equities? where do you think? >> what we're seeing clearly is outflow going into two places now. going into european equities outside the uk, we have seen 11 consecutive weeks now of positive flows into europe, many investors have been shunning europe for many years, now starting to come back into europe as they see political risk on the continent having peaked and stronger economic data coming through. and emidterming ma iemerging ma activity is getting stronger, earnings are getting stronger
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and you're starting to see some evidence of supply side reform there in emerging markets as well. 11 weeks of consecutive flows into emerging markets too as investors are starting to put their toes back in the water and take risk again. >> a pleasure, thank you for coming in. richard turner, global chief investment strategist at blackrock investment institute. we wrap it up here for the special programming coming from london. "worldwide exchange" is coming up in a few minutes. let's leave you with a shot of ultimately what it is all about. who will end up in number ten downing street? hopefully not that chap who just walked in front of the camera. he doesn't look prime ministerial to me. will theresa may remain the boss? that all to play for in just a few minutes.
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the pound tanks as the uk heads for a hung parliament. all of the reaction and fallout coming up. we're live from london and cnbc headquarters. "worldwide exchange" begins right now. >> and welcome to "worldwide exchange," i'm sara eisen with mike santoli at cnbc hq. rupert is reporting from london this morning where in a stunning turn of events british prime minister theresa may has


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