tv Street Signs CNBC November 15, 2018 4:00am-5:00am EST
welcome to "street signs." i'm joumanna bercetche these are your headlines brexit secretary dominic raab resigns in a shock move that sends sterling lower after british prime minister theresa may wins backing for her draft deal but faces stiff opposition in parliament. french finance minister bruno lemaire gives a pessimistic assessment of the brexit process saying the british public were lied to. >> the british people have deci
decided to go out of the eshgu.. i would think it was a mistake, but that's the choice of the british people aston martin shares skid towards the worst day in a month as the british car maker warns a disorderly brexit would stall producti production. and jerome powell paints a positive picture of the u.s. economy but also gives a rare warning. >> i think this year has seen a gradual chipping away at that picture. you see a bit of a slowdown, not a terrible slowdown. you still see solid growth but you see kind of growing signs of a bit of a slowdown. it is concerning our top story, out of the frying pan and into the fire dominic raab has resigned a day after theresa may received cabinet backing for her brexit
deal following a five-hour meeting. the decision is a major blow to the british prime minister who faces the tougher task of selling the agreement to parliament and averting a potential vote of no confidence. we have seen the currency nosedive after this news emerged. you can see already sterling is about 1% weaker on the session we were trading up at 1.30 on positive developments overnight that she got the deal through cabinet. but now with the resignation of the brexit secretary, we have nose-dived in the pound and the picture is grim. about 1% weaker. i want to get out to willem who is in westminster and silvia is in brussels. willem, huge developments just in the last couple of minutes. i think when people were talking about potential resignations from the cabinet nobody assumed it would be dominic raab who is the brexit secretary >> yes
of course if you look at what he said over the last few months about the backstop and withdrawal mechanism for the back stop it should come as no surprise that he has said that's one of the key problems he faces with this draft deal the cabinet agreed to yesterday. he also talks about in this letter that has come out, he believes the regulatory regime proposed for northern ireland proposes a threat to the integrity of the united kingdom, echoing other members of the dup about the potential differences you could see in terms of trade and customs between northern ireland and the rest of the united kingdom if that backstop kicks in at the end of 2020. in terms of what this means for theresa may, we have had another resignation from the government, the northern two northern ireland secretary. this means that when this comes before a vote at some point in early december, it will be more likely that conservative mps,
ex-ministers like raab will be prepared to vote against the proposal that's where theresa may faces a national obstacle beyond any opposition she might get from the eu 27 about the uk-wide customs territory that has been agreed upon by both sides so far. >> in a sense doesn't this just mean that the person who is actually conducting the negotiations is secondary to what the eu are willing to give as concessions we had david davis resign over the eu's tough bargaining position with the uk and forcing them into a situation that didn't respect the fundamental brexit principals. we also have dominic raab resigning because of his reservations over the irish back sto backstop ultimately it is up to the eu on this point to make more concessions. >> they clearly have held a number of the cards when it comes to this. that dates back to last december when this backstop was agreed in
vague language, unless, until and essentially until theresa may faces that difficult task of trying to square a circle. if you look at the differences between herself, david davis and now dominic raab, that's the key point, the relationship with the brexit secretary and the prime minister and her pushing in a direction they were not comfortable with >> we already heard from the dup yesterday, arlene foster tweeted she made her position clear to the prime minister we have the latest developments of the brexit secretary resigning. numbers-wise it is looking difficult that the parliamentary vote will pass actually, looks like we lost willem who was live in westminster. let's move on and talk about the european angle and side of things we now know the leaders of the eu 27 will meet on november 25th to endorse the brexit deal between the eu and the uk. european council president,
donald tusk, says the draft text is being examined by all countries. silvia is in bristles and has been monitoring the action from the european side of things. it looked to be promising, we know we have a formal date, november 25th for the eu to sit and ratify this deal the big question is how europe will respond to this news that the brexit secretary has indeed resigned >> exactly things look very shaky now let me guide you through the next steps as you mentioned, the capitals will be examining this exit agreement over the next couple of days, that's in anticipation of the summit scheduled for the 25th of november donald tusk said this morning this would be the plan "if nothing extraordinary happens. of course after the resignation of the uk's chief negotiator, we don't know whether this will
still be the case. we're still waiting for clarity on that front. we also heard from michel barnier, the eu's chief negotiator he said that we have no time to lose we need to start working on the future relationship as soon as possible >> our work is not finished. we still have a long road ahead of us on both sides. for my side, the next few days we will all work on the text of the political declaration, the future relationship with the member states as well as with the european parliament. this work will be intense. our goal is to finalize this political negotiation with the uk so that the european council can endorse it >> since the very beginning we have had no doubt that brexit is a lose-lose situation, and that
our negotiations are about damage control >> i'm afraid that right now things do look very shaky. we don't know exactly if this european summit will actually happen on the 25th of november but we'll keep checking with european institutions and bringing you all the latest. >> silvia, thank you for bringing us the latest from brussels plenty of breaking news to grapple with i want to bring in steve blix. never a dull moment in politics. >> no. >> clearly we had the reaction in the pound i think the market is jumping quickly to the conclusion that it is going to be difficult for the prime minister to get this deal through parliament. what do you think of the trajectory of sterling from here in the run up to this important vote do you not just touch the thing until the vote in december >> the short, easy answer is
volatility with every bit of news it will not trade on fundamentals. but the implications for fundamentals going forward and i think what's going on, i'm not really a brexit expert or anything like that, i think coming here a lot it was always the sense within britain that somehow britain controlled the argument and the terms of the divorce. do we want a har brexd brexit, want a soft brexit so whatever england agreed to is something the eu would have to accept i think what we're finding out here and what the uk is finding out is that there's a strong negotiator on the other side that has their notion of what the terms should be. >> i think that was self-evident over the last six, nine months it's been quite clear because we had two brexit secretaries resign this is the second one in the
last few months. in terms of the economic outlook, already it looks as if the uk numbers had started to drift a bit lower. now we're getting more uncertainty, lots of questions about the future of uk's relationship with the eu and whether or not we can make it to a transition deal at this point. if the uk does not make it to a transdeition deal and crashes ot how much would that affect the economy? >> it is an adjustment process london and the british economy are not suddenly going to disappear. it's a question of adjustment, whether it's a smooth adjustment, a difficult adjustment you had 40 years of trade relationships built. it takes time to unwind that people in the media sometimes get more inpatient >> no, never >> they get more inpatient with the timing of these things but these things take time i grew up in the united states
with a lot of labor management negotiations, there was a lot of histrionics. in the end the british economy is a very big economy. it's important to europe europe is obviously important to britain. and some sort of agreement will occur that has the spirit of brexit in it but it was never going to be smooth the british were never going to be able to dictate the terms of the divorce settlement >> let's, i guess, hope for the best then, your optimism is welcome. broadening out the discussion a bit, in general we have a string of disappointing data, almost everywhere in the world right now. we even heard from chair powell. coming back to europe we had a negative gdp printout of germany. many forward indicators pointing to a slowdown in momentum. do you think the best is over as far as gdp growth is concerned
for the rest of the world and also specifically for europe is this the best >> i think the german economy slowdown was probably more about higher oil prices hurting consumption. and oil prices are coming down, so that probably reverses itself a bit going forward. have we seen the best? i think what's going on is the european and the global economy is getting used to the normalization of interest rates especially at the short end after ten years of zero. so the fed has been shrinking its balance sheet, which means really that it's not buying treasuries, so those treasuries have to be purchased by the public on top of what the deficit has created. and now you are going to have draghi and the ecb step away from ecb purchasing of assets,
probably after the end of december and all of a sudden you've got 2.25%, 2.50% rates in the united states that becomes an asset class for businesses suddenly the cost of capital, really the cost of carrying inventory is positive. it's no longer negative. there's an adjustment process to that i think that's what's going on in the world >> global tightening of financial conditions we'll talk more about the u.s. stay with me, steve. if you want to get involved in the conversation, tweet us @streetsignscnbc you can also tweet me at cnbcjou. coming up, fed chair jerome powell warns of global headwinds but reiterates his confidence in the u.s. economy (vo) gopi has built her business with her own two hands.
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signs" this morning. we had another weak close for u.s. equities. the dow has closed below its 200-day moving average the mood in asia was more positive we're seeing a rebound there on optimism that the u.s./china talks at g20 may have positive results. a bit of optimism in asian equities shanghai composite jumped around 1.4% the picture in europe is a little negative. stock stock trading down about 0.10% weaker the ftse 100 has a strong inverse correlation with the currency on a day when the currency is weaker you would expect to see the ftse 100 bounce because it is an
export sensitive sector. you would probably be surprised to see it up after the brexit secretary resigned xetra dax and cac 40 trading more positive. ftse mib is negative, down 0.2% as that market continues to deal with the unfolding of the italian budget situation let's talk about currencies. all eyes are on the sterling crosses here and the reaction in equity space we are seeing a bounce in ftse 100. when it comes to the pound versus dollar, we are trading more than 1% weaker. this happened in the last 10, 15 minutes. now trading down 1.2850. before that news we were trading at 1.30. some people are quickly getting rid of positioning after getting into longs once it emerged that the cabinet signed off on the
brexit deal. euro/sterling, sterling is trading weaker versus the euro currency 0.88 the figure. generally the picture is one of sterling weakness across the board. we will keep an eye on developments across the uk i wanted to talk about what's been happening in the u.s. fed chairman jerome powell warned the u.s. economy is not growing at the same pace as last year he said the central bank is watching a modest slowdown in global growth. >> i think this year has seen a gradual chipping away at that picture. you see a bit of a slowdown. you still see solid growth, but you see kind of growing signs of a bit of a slowdown. it is concerning >> powell also expressed confidence about the strength of the u.s. economy and credited the fed for boosting that growth he said markets should get used to the idea that the federal reserve could hike rates at any
time next year >> our policy is part of the reason why the economy is in such a good place now. we have 3.7% unemployment. the economy is growing at 3% inflation is on target there's good reason to think we'll continue, you know, in a positive vain like that. pleased about the state of the economy. >> steve is still with me on the show interesting powell saying that saying we could hike at any time next year. that sounds a bit hawkish to me. >> what happened is they shifted from a quarterly schedule of press conferences to having a press conference at each one that means every six weeks there's a press conference so the sense to the marketplace is thatthis is a -- >> they discuss the hikes at press conference meetings. >> yes so everything is a live meeting. you could read it another way. you could say they could hike at any time, doesn't mean they'll
go every quarter they might skip a quarter or a few meetings before they go again. our own view is they'll go in december we know that to me, march is more in question than i think most economists think. i certainly don't think they'll do four hikes next year. it's basically on the simple issue that the u.s. economy is slowing towards 2% real growth >> definitely the signs are there that the u.s. economy is slowing. one of the boosts to the u.s. economy this year was that big fiscal spending plan, the tax cuts announced by the administration earlier on in the year we've seen a big bounce in manufacturing. the labor market trading tight all of those transitory effects are beginning to wane what position does that put the fed in next year >> it puts the fed in the position of saying growth is back towards 2%. the argument about neutral was
always the notion that short-term rates would be at some point where the economy would still expand, but not expand that rapidly so that it would force inflationary pressures higher for most they think that the economy around 2% real growth delivers that. whether it's 1.8, 2.3. but in that neighborhood so if they start to see growth go down to that level on the back of the fact that you don't have more stimulus, you do have a higher deficit to finance, you do have a stronger dollar, all of these things, and you do have trade disruptions to trade that are negatively impacting capital spending plans, so when you have all of that, it's easy to see the economy slowing to that level. the fed just saying, you know what we're at 2%. we're at 3.7 on unemployment let's watch and let's wait >> have you done analysis on how much the trade war has impacted the u.s. economy perhaps it's too soon because the tariffs were applied, how
much do you expect it to take off from gdp forecasts >> impossible to say i think even the tariffs, certain percentage of that tariff will get hit to the consumer some of it will get hit to margins from sellers some of it will get pushed back to the producers in china. we also know that the yuan has deprecated to offset tariffs if it goes to 25%, the yuan probably deprecates another 15%. it's very difficult to say in terms of the tariffs themselves. i think what really has occurred, and you are seeing it in spending plans in surveys of capital spending plans is that they absolute y have weakened ever since all this trade disruption talk has gone into place. why would you build and how
would you make that decision until you know what rules of the game are going forward >> there's been talk about an infrastructure plan coming out of this new house and new congress there would be bipartisan support from both sides. is that something you're beginning to factor in does that pose upside risk to the forecast >> infrastructure spending is one of those things that everybody is in favor of it until you try to finance it and then you try to figure out what infrastructure will get built. that's where it breaks down into all sorts of different factions. as a result my guess is that it will be what it is it will be a discussion. it will be out there but there just isn't a consensus. you know, if they had not had the size deficit increase that we had you might be able to push something like that through. you have over $1 trillion. then you have the fed not buying
anymore on the treasury. that's a lot of money that needs to get financed. >> steve, we'll leave it there thank you very much for joining me on the show >> all right >> i want to recap some main news we got in the last half hour the uk brexit secretary, dominic raab, has resigned he cited two reasons he said he cannot support the proposed deal that passed through cabinet yesterday. first because he believes the regulatory regime proposed for northern ireland presents a real threat to the integrity of the united kingdom second, he cannot support an indefinite backstop arrangement where the eu holds a veto over the uk's ability to exit those were the two reasons dominic raab cited for resigning. we also heard from the labor party. they said the government is falling apart now that raab has resign resigned we also heard from dup dodd who
says that they thank raab for his efforts and for standing up for the union. so we'll continue to monitor those developments we had a big move in the sterling pound already. coming up, bruno lemaire lashed out at british politics for lying to people during the brexit campaign. details when we come back. >> the richest people have decided to go out of the eu. i would think it was a mistake but that's the choice of the british people 300 miles an hour, that's where i feel normal. having an annuity tells me my retirement is protected. learn more at retire your risk dot org. vof hundreds of families, he'se hmost proud of the one the heads
is seen as to how challenging a parliamentary vote may be. french finance minister bruno lemaire gives a pessimistic assessment of the brexit process saying the british public were lied to. >> the british people have decided to go out of the eu. i would think it was a mistake, but that's the choice of the british people it's a heavy day for uk news let's not forget about the data. we just got the uk retail sales numbers that came out. october retail sales number came in at 2.2% year-on-year versus september's 3.3% year-on-year. the expectation was 3% more bad news for the currency here big disappoint versus expectations and a big drop versus where the number came in last month this will not be received well
by the market. retail sales came in at 2.7% the poll was 3.3%. remember, the spending over the summer held up well because of the world cup, because of the good weather we're now seeing some of those effects subside. so the data is actually quite disappointing on the retail sales side sterling down 1.4% on the day, trading close to 1.28. just a half hour ago we were trading at 1.30. so we're seeing big moves in the currency that's because out of the frying pan and into the fire. brexit secretary dominic raab has resigned a day after theresa may received cabinet backing for her brexit deal following a five-hour meeting. the decision is a major blow to the prime minister who faces the tougher task of selling the agreement to parliament and averting a potential vote of no
confidence willem is in westminster lots of developments over the last 24 hours. what was meant to be a positive outcome in that the brexit deal would pass through cabinet yesterday, all of that optimism seems to have gone now, eroded in the last half hour with the news that dominic raab has resigned he's given a couple of reasons, his motivations for resigning here ultimately it all comes back to this question of the irish backstop >> that's something he has mentioned in the past as a challenge to his willingness to move forward on theresa may's plans. he had wanted to have a unilateral mechanism where the uk could opt out essentially of that backstop once they felt that the future trade arrangement had been sufficiently prepared to replace it of course the european side was not comfortable with that. so now you have a process whereby if the uk and eu cannot
strike a trade deal before the end of 2020, if they decide not to extend the transition period to allow for more time on they'd talks, they would end up on a backstop, and if the uk government wanted to exit, they could not do so unless the european side agreed that is one thing that drove dominic raab's resignation this is the man that led the negotiations on behalf of the government he was in brussels frequently interacting with his counterparts including michel barnier. for him to decide only once the cabinet approved this measure that he should resign indicates that he hoped or expected the cabinet may not have followed theresa may's example yesterday. so the idea he negotiated this deal, once it hit cabinet and got approved and then resigns implies to me he expected the cabinet to shoot it down the idea he would have continued with those negotiations for many
weeks and months seeing quite clearly some time ago this was the direction of travel, this was the likely outcome is very surprising but what it means for theresa may on a short-term basis is her leadership once again is under threat there's more momentum for those inside her own party to call for a leadership challenge by submitting letters to the 1922 committee, the organization within the conservative parliamentary party that would force that kind of confidence vote in her leadership it also means longer term down the road you have two less members of her own government who will be feeling obliged to vote with her when it comes to a commons vote they can now follow their conscious, that could lead to more complex parliamentary mathematics when we get to that stage. >> i want to talk about that complex math we have this parliamentary vote that could happen as soon as december best-case scenario is the deal
gets voted through worst-case scenario is that it doesn't get voted through, and we're in a situation where either a new election is called. they look to hold another vote or push forward with a no deal arrangement. all of those options, wouldn't they require an extension of article 50 >> not necessarily for that to be permitted we're waiting to hear from a court in luxembourg later this month to hear whether that is permissible under the european treaty. in terms of those options we're waiting in theory if this is struck down in the house of commons after the eu summit nearly december, it would mean it would be until late january for the latest version of opportunities available to us and again this is all so many ifs and buts that's if the european side it willing to make any changes to
their position which based on the language we heard from donald tusk and michel barnier is very, very unlikely >> no doubt it will be a busy couple months for you. thanks for bringing us the latest from westminster on this all-important day from the uk. french finance minister, bruno lemaire, described brexit as a historic mistake. speaking at the women's form in paris he also lashed out at british politicians for lying to people during the brexit referendum campaign. karen is at the women's forum in paris. not mincing his words there, mr. lemaire. >> he was very open on stage, and we had an opportunity to catch up with bruno lemaire, he did said he wanted a smooth process of brexit, that that
would be good for europe keep in mind that let's go back to where the french started. they wanted to extract blood effectively from the uk in this process. they wanted to send a message to europe that exit at your peril they wanted the toughest possible deal. just some comments in the last couple of months saying any decision that leaves european citizens with the impression that you can leave the european union and keep all of the adv t advantages would be suicidal when i caught up with bruno lemaire on stage, i asked if this deal was suicidal for the uk >> the british people decided to go out of the eu i would think it was histoa mis. that's the sovereign choice of the british people now we have to take into account the consequences of that choice.
you cannot be out of the european states, out of the european union and keep all the benefits of being in the european union either you're out or you're in but you can't be in, you can't be out with all theed a vaptd ta advantages of those who decide to be in >> do you see a situation where the uk will be happy to take all of the european rules? one issue around the referendum was that many of the people in the uk were not happy with being served up rigid rules from europe that remains the case, that you have to take the european rules. do you think the uk will proceed with that type of scenario >> i know it will be difficult for the british people and many politicians to accept and keep the rules of the european union. i think that many british politicians have been liars. they've been lied to the british people by explaining it was simple to go out of the european
union. >> bruno lemaire there one issue with brexit for the french government is that they had a five-year mandate. what they wanted to bring about was european reform. brexit has taken up so much of the air time and so much of the back channels in brussels that not much is getting done on reform whether they can push forward the agenda is still in doubt for many given the budget issues with the italians coming up with a budget that breaks a lot of the rules, there's not much appetite in brussels for there to be support for closer integration so the french are having a tough time on that front but also when it comes to digital taxes. one big issue when you look at the divisions in society, whether that's around brexit in the uk and in europe is that some people feel like they're not taking part in this revival story. that a lot of profits are going elsewhere to big technology companies based in silicon valley how do you get a share of the profits that enables the french government and others to push forward with government agendas?
i spoke to bruno lemaire you think his day might have been taken up with brexit, actually it's been taken up with digital taxes. he's trying to push forward with reform agenda, and one obstacle is the german government position if digital taxes come into force next year, you could see the ire of u.s. president donald trump on tariffs around german cars. this is a major stumbling block. even getting an interim digital tax seems like it won't take place for a number of years in europe and it might be up to the oecd to push forward the agenda first. if that doesn't happen, europe might come to agreement on a digital tax. listen to the comments he was making about digital taxes >> i hope we can face this, and i hope that we will remain strong and united to face the
american administration. because i will be simple and clear, i cannot accept to have google, amazon, facebook paying less taxes, 40 points less taxes than my butcher or my book shop. i cannot accept that either some anything thnations, governments want to explain to the people that they accept google, facebook, apple paying less taxes than smaller companies, good luck for the next european elections. >> i think that was directed at the german finance minister to go after donald trump and to forward the agenda on digital
taxes. without german support this interim digital tax will not happen you have a number of different states in europe going after taxes individually it is a problem. if you want to administer taxes individually across borders it gets messy and hampers the development of technology in europe you talk about the future, the united states and china are far more progressed on technology than europe is at this point how is this relevant to brexit it's about suring up the system. shoring up the european system it's about reform agendas. all this ties together, which is why this issue of digital tax is still key for the europeans. >> absolutely. i'm also interested to hear how many times a day or week mr. lemaire goes to the budget thank you for the latest from paris. our next guest once described brexit as a mitigated disaster i'm joined by the ceo of allianz
global investors you're standing at the very spot i was standing at about an hour and a half ago thank you for joining us >> good morning. >> so you did once describe brexit as an unmitigated disaster how do you feel after the news emerged in the last 24 hours >> well, i feel similarly. we -- my comment at the time was meant to describe a state of affairs two or three years after brexit but of course what we got here is we had three, four years of intense focus on brexit. that's coming to an end now soon education, housing, healthcare, none of that has been tackled. we focussed on brexit. that's not a good thing. and now we're looking at potentially a major constitutional crisis if we can't get the deal approved by parliament, which looks tenuous, what next? >> given what you just said,
given that you think we're headed towards a major constitutional crisis, as an investor managing such a huge portfolio of instruments, is this an environment that you want to trade in would you be looking to trade around this? do you simply say i will step away from the table because i have no clarity on what will happen >> you can't really step away from the table, but you rarely trade. we're long-term investors. most of our investments have carried out and have been put in place for certainly more than a few months therefore this sort of environment you kind of avoid. you take your long-term investment decisions you have to take otherwise you try to stay away some people say short sterling others say this is an opportunity to go long in the stock market nobody knows what will happen the next few days or weeks, so the speculators that trade around that are foolish. >> do you think it's a zero sum
game, if businesses leave the uk and crash out with no deal, perhaps european businesses could benefit? what's your take >> i've taken the view that the third largest economy in europe leaving the eu and consequently potentially having increased friction around trade and services is a lose-lose situation. not only for the uk, but also for the european union most business leaders i know take that view if you look at our own business, if we had to establish a legal entity in the uk, moving away from our branch network, duplicate services across the european union that we currently have in the united kingdom, our cost base goes up, if that goes up, we can reduce costs. that will hit continental europe and the uk taxpayers everywhere lose. we are seeing big moves today in the uk gilts, 10 to 11 basis points firmer, of course on the
back of the market getting nervous. what we have seen this year is a big upward move in fixed income, particularly in the u.s. we have yields there at one point topping 3.25 where do you see u.s. treasury yields heading from here onwards? >> i think u.s. treasuries right now are finally poised 10, 15 more basis points on top would mean that, you know, we go into unchartered territories, then there's a lot of upside territory to go to 4 that's not what we're predicting those increased signs that the global economy is slowing, finally those trade frictions that president trump and others, the chinese are engaged with, the trade war we're seeing and intensifying all the time is having an impact consequently that will put a cap on yields rising further i wouldn't read too much into gilts rallying today that's just a risk-off trade
we'll have to see what happens over the next few days and weeks with brexit to see where gilts might end up >> of course just one other broader question, this year there's been a lot of talk about investors pulling out cash away from bond funds into other types of funds looking at your numbers, you had strong net cash inflows for the third quarter of 2018. do you think the appetite from the investor community is one where they want to be long fixed inonly instruments and still involve d in the bond market >> i think fixed income instruments are always attractive to investors. many fixed income managers are really looking at outperforming the fixed income markets on an absolute return basis. we're not reading much intothe positive net flows that we've had in q3 and are continuing in q4 it's an outlier. the industry suffered significant outflows in q3 that continues in q4
overall investor sentiment right now is pretty risk-off the macro economic and political environment globally is worrying a lot of people. uncertainty is never good for investor or for businesses >> certainly appears to be a risk-off day thank you so much for joining me on "street signs." coming up on the show, we'll talk brexit and trade tensions with former australian prime minister and asian society policy institute president kevin rudd stay with us rebekkah: opioids has taken everything and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it.
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. welcome back to "street signs. it's a big day in the uk just an hour ago we found out that the key brexit minister, dominic raab, has resigned we're seeing a big reaction across the board namely in the currency you can see now sterling, the pound has dropped more than 1.6% just an hour ago we were trading up at around 1.30. we have broken through 1.28.
1.6% weaker. big moves as the market grapples with the ensuing uncertainty lots of questions about further resignations to come and whether or not mrs. may can push through this deal through the parliamentary -- or through the house of commons once they hold a vote as soon as december let's talk about uk banks. here the only bank that is trading positively is the bank with an international exposure, hsbc standard chartered also outperforming. all the domestic-focused banks, huge moves barclays down almost 7%. rbs down 7% as well. i'm happy to say i have a special guest with me. kevin rudd, former prime minister of australia and president of the asia society policy institute thank you for joining us on "street signs. i guess you were not expecting to talk about brexit today let's talk about brexit.
the developments over the last 24 hours have been crucial to where this country is headed both politically and economically what is your take? i just spoke to a guest who was saying that the uk is actually heading towards a constitutional crisi crisis >> sounds like another normal day in british politics. that's what happens when you consult the people and have referendums on questions where you're not quite sure what the answers will be. what is the world view of this and how do we see it in asia and australia? the world would like a strong and united europe. i think the general opinion across the world is that is enhanced by britain continuing to be a full member of the european union we also happen to have a view, at least on my side of australian politics, i think, that for britain's future economic well-being, being in europe is better for britain
australians would see britain as a gateway to their own futures in europe. we are where we are in the midst of this process that you just described. my own thoughts would be if this is voted down in the house of commons, when it goes to the vote next month, which is a possibility, then there's no bad thing for the people to be consulted again. the people voted -- >> take it to a peoples vote >> if you're going to exit brexit, then it has to go back to the people. the question then is this deal being put forward the right one for britain, or if that's the alternative, should britain remain where it is as part of the european union >> what does all this uncertainty mean in terms of the uk's ability to negotiate trade deals with noneuropean members of the world can they actually -- can you start discussions with the uk government when there's so much questions unanswered >> the answer to that is it's
problematic. the agreement announced by the prime minister last night, that kicks the can down the road for another two years on the substance of the uk/eu trade agreement. in the absence of that being clear, it's an open question on whether the uk can profitably engage in negotiates with australia, canada, the united states or even the transpacific partnership in the wider asia pacific region i would see that as being kicked further down the road. the view of my country would be along these lines, whatever the british finally decide, we in australia, because we like the uk and want it to succeed, we do what we could through a bilateral agreement. if you have not resolved it with brussels, it's hard to do that >> only about 40 seconds there's a bit of optimism priced into markets overnight that the discussions between the u.s. and china on the sidelines of the
g20 might yield positive results. what do you think? >> i would give the prospects of a deal just under 50%. it hinges very much on whether those forces in the white house who want a much tougher trade outcome with the chinese prevail in their view. forces around navarro and miller would like to turn this into a longer term rolling form of economic warfare >> they seem to be a bit pushed to the sidelines now we'll have to see how that develops i'm sorry we didn't have more time very big news day. thank you for joining us kevin rudd, former australian prime minister for european viewers, stay tuned for our coverage of impre minister theresa may's statement to the house of commons. for u.s. viewers, "worldwide exchange" is coming up next. xfinity mobile is a new wireless network
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breaking brexit news the pound plunging as theresa may's top brexit secretary resigns. we are live in london with those details. markets right now, the dow moving lower as it extends its longest losing streak since august and crude realities. oil did snap a 12-day losing streak while nat gas pulls back from a four-year high. it's thursday, november 15, 2018 you are watching "worldwide exchange" on cnbc. >>