Transcripts For BLOOMBERG Countdown 20160705

Will come down. But no, i cannot see the market roaring ahead. Anna a very warm welcome to countdown. Im anna edwards. Manus and im manus cranny. We are back together ratesa, they leave unchanged. This will be the perennial issue for global Central Banks. The effect of the brexit vote on the Global Economy remains to be seen. Will they move . Would they really want to do that in the face of so much uncertainty . It will certainly be about the pound. Anna we will see what this means for the aussi dollar into the future. We have this great chart, the 100 year story about the story of the pound. The 10 drop we have seen since june 23, just another letdown, manus, in the u. K. s declining global role and influence. Manus weve got to balance this out because boris johnson, hugh gone into the sunset now. Johnson, he has gone into the sunset now. In 1949 and 1967. So, the quest you have got to ask yourself is. Cents below its average since 1971. I redone with the great demise of the British Empire . The great done with demise of the British Empire . Anna manus, lets bring up the risk radar and show where we are with various asset classes. The market is up and running now, the u. S. Bonds. Year. He u. S. 10 pharmp for the non payrolls on friday. The u. S. Dollar against the 02. 04. Se yen, 1 the yen, up against all of its g10 peers. You got silver, it went well above 23 yesterday. Now, down by 1. 9 . Price in there as well. What we see today is money coming out of equities and coming out of some of the safe havens, some of the Precious Metals. Manus it is a composition of reflecting of what actually happens. You got the shock and the awe, and the aftermath, and the hope that the Central Banks are going to act. That is your risk radar. It is going to be all about fx. Lets get to the bloomberg first word news. Reporter saudi arabia has been hit by three suicide bombings. Four peopled killed in the attack near one of the holiest shrines in islam. The third explosion happened to the u. S. Consulate. The u. K. Will balance its mp today, hoping to succeed David Cameron as party leader and prime minister. Secured secretary has most of the public endorsements from colleagues. Gainedrgy minister backing of the former london mayor, boris johnson. The u. K. Business confidence drops and pessimism about Economic Outlook has almost doubled. That is according to a survey published by the center for economics and business. Cbdr saysr at the investments over the next 12 months have gone off a cliff. And the ceo of the worlds Top Oil Traders says crude oil prices will not rise much beyond where they are now. Slowing demand is to blame. Demand continues to increase, which i think it will. I think we will be maybe, in the 60s. 0s or early at the end of next year, you see 60 oil . Reporter and the juno spacecraft has successfully entered orbit around jupiter. Juno, welcome to jupiter. [cheering] reporter the news, amid cheering, clapping, and tugging. And hugging. Global news 24 hours a day, powered by 2600 journalists in more than 120 news bureaus around the world. You can find more stories on the bloomberg at top. Manus . Anna anna now, lets check on the left Market Action with haidi lun. Haidi we are seeing something of a correction, given that we have had this is the first decline we have seen regionally in a week. We can see little bit of a return in terms of risk appetite. The yen is up about 0. 5 at this point. The at the nikkei 225, currency story is playing out in a big way. Mitsubishi, the top decline there, down by over 4 . Sharp, down by close to 6 . Elsewhere around the region we can see weakness coming through from korea as well, down by. 3 . We saw a threeweek high in yesterdays session, the hang seng up by. 9 . It was suggested that in the second half, the pboc would be finetuning Monetary Policy. Perhaps, in the way of shortterm cash injections. We might not get that wholesale easing, or potentially a rate cut. That does seem to have disappointed investors when it comes to the Chinese Markets in thi part of ths part of the wor. On the mainland markets, we can see china up by. 4 . Sydney stocks down by 1 amid political uncertainty. Conclusion to get a from the weakened election. Election. E weekend we had a little bit of a spike here, but it has come down now, 7509 at the moment. Manus the Australian Central Bank cap Interest Rates on ho. D. Rates on hold. The cash rate was left at 7. 5 britainsighs decision to leave the European Union and the election. Anna what were the reasons for keeping rates unchanged . There are many uncertainties to deal with. There were and some of them got a mention, and some of them did not. The reserve bank of australia said it was prudent to hold at this time. It did note volatility in the markets. But most markets have been continuing to function effectively. As for australia, overall growth is continuing, despite what it calls a very large decline in business investments. But no direct mention on the rather chaotic political scene we had here over the weekend, anna. Manus and 26 out of the 27 economists we surveyed at bloomberg expect a cut in august. Why is that . There is this debate about what Central Banks will have to do next, paul. Paul for the answer to that, you need to look back at may, which is when we got this very deflationary consumer price. It was the first time when we had deflation in australia in seven years. Now, the rba is a deflation targeting central bank. So, they had to act. That is when the cash rate was cut down. On july cpi read is due 27 and the rba meets again one week after that. That is why there is a pretty heavy consensus that if the rba is going to move, that is when it is going to move. Allen innk you, paull alle sydney. A great pleasure to have you on the program, as always. Lets start the conversation this morning, looking at australia. We thought we might have the monopoly on Political Risk in europe, and then we were reminded over the weekend that we dont. How much is the political gridlock an issue in australia right now, and how much is that a sideshow . Answer to the very complex situation in australia it makes the job more difficult. We do have to deal with some mixed debt domestically. At the same time, australia is very sensitive to china. The currency is amongst former trade. So it is affected by global development. And now we have this the mastic uncertainty. This is why the rba is holding the situation. Later,ll use these rates when we know exactly what is going on. Manus clarity, there is a very important word. If we had a little bit of clarity, we would all be a lot richer. Political risk is something everybody in the world now needs to measure more aggressively. Paribasnp political interest. Spiking less of member. September. It is all of these various factors going in. How are you modeling for Political Risk . Is the next big Political Risk on the horizon trump or is it a frexit . We are definitely in a new situation of Political Risk. The Global Outlook has been very weak since the global crisis. Wages for Skilled Labor has been falling. So, in many countries, what seems to be the majority now of people, are voting for anything but the establishment. This could lead to good outcomes if it leads to new governments, but it can also lead to Better Outcomes because the could give the power to the populace. But definitely, the protest vote is something markets have to take into account. This is not business as usual. They could lead to risks down the road. Investors are focusing much more on the u. S. Elections and after the brexit vote, i think investors will be much more aware of other countries in the eu. Anna it seems that the Political Risk is one of the factors stopping yields from getting off the floor right now. It is another layer of uncertainty that will stop Central Banks, even when they look around and see positives in their economy. They cant tighten policy or loosen it because of the Political Risks. Thise fed wanted to hike year, given the hike last year. But brexit gives them an excuse to stay on hold. Something to change with qe. Now, brexit gives him an excuse. Anna a gives him political cover. Exactly. So, central bonds will do more very soon. Manus they have had the political cover the whole way al ong. The argument is that central politicians are not doing enough. And here they are. Now they are going to be too frightened to do anything. 59 billion euros, that is what is going to be shaved off the European Growth story. Brexit is going to shave. 6 off the euro area. That is the reality of brexit. What should the policy response the . The what should policy response be . Because the consensus is that negative rates are too destructive. The central bankers are the only one to focus really on growth. Governments actually complicate things even more. Fiscal policy is not the problem. There are political asset and there is a price to pay when you only rely on Monetary Policy to do the right thing. It leads to bond prices, as you mentioned, they are at historically very high level. You have to wonder, is this sustainable . Central banks always wanted excuse to do more. Anna thank you very much athanasios. Lets get up to speed on the day ahead. Matt manus a successor will be elected to David Cameron. The bank of england will publish its Financial Stability report at 10 30. Anna later today, barack obama campaigns with Presumptive Democratic nominee Hillary Clinton for the first time. That is in charlotte, north kill anna. Carolina. Arlotte, north manus up next, we look at the ballot and the tory mps. This is bloomberg. Anna welcome back, everybody. This is countdown. This is a live shot of hong kong this afternoon, of course theuse it is 1 19 in afternoon there. Lets get to the Bloomberg Business flash. Saysind the ceo of vitol levels will not rise much above current levels. So demand and efficient refinery prices are to blame. And efficient refinery prices are to blame. I think we will be in the 60s. 0s or at the end of next year, use the 60 oil . At the end of 2017, i could see 60 oil. The company resumed trading yesterday for the first time this year, following a sixmonth halt. The shanghai composite index will force by the end of september, sledding 2. 7 in the Third Straight decline. A deepening economic slowdown traits the possibility of a yuan devaluation. And Goldman Sachs has told its Asset Management staff to tighten their belts. That is according to a report ti from the financial that is according to a report from the financial times. 2000 employees must curb spending. That is your Bloomberg Business flash. Anna thank you, rosalind. The u. K. s really conservative party today will take the next step to selecting the nations next prime minister. All tory members of parliament will be balloted on the five contented members vying to succeed David Cameron. At around 7 00 in the evening london time, the results will be announced. The Energy Minister yesterday topped the poll of Party Members and won the backing of the former london mayor, boris johnson. Anna mark carney will address the threat facing the Financial System following the brexit vote in a News Conference that takes place today. We will have that at 11 00 u. K. Time here on bloomberg. Anna less, users can follow the reports released at the News Conference on your top live. Athanasios is still with us. This is almost a shakespearean play in the making. It is all about what comes next from mark carney. Do you expect a policy response of qe and rate cuts. And what is the timing . And mostination likely, he will be proactive. He is not going to wait. We know from the assessment before the referendum, that they were very consenting that the u. K. Had to leave the eu. We expect the u. K. Economy to go back into the recession. So, there is no reason for them to wait. They will start with a cap, flagging that qe is possible. Anna was the biggest risk for the u. K. Economy . Is it businesses losing confidence with investing . It is now suggested that 49 of those businesses surveyed felt pessimistic about their future Economic Outlook. That is compared to just 25 previously. So, a big spike upin that pessimism from business. It is the uncertainty on what will be the new regime with the eu. And the fact that it will take time to get an answer to this question. It could take more than two years. So, Investment Decisions will be postponed. Hiring, consumption, this could be negative for the economy. The if you are booming in longterm, for now, you just wait and see. Manus we start the show with a 100 year debasement off of sterling. Where next for the pound, is it 1. 20 . Is this the great demand of the british pound . How low can she go and when will we get to zero rates in the u. K. . Definitely, the adjustment in positioning is behind us. That we see further downside because the market is not priced fully by the bank of england. Is likely by the end of this year, we will be close to zero Interest Rates. So, we can see cable below 130 and by next year ,125. Last week actually, we had this opportunity. Anna what is it about the story that is negative for cable that we have not priced in yet, do you think . I think the market is looking at the policy reaction of the bank of england. Are they going to support sterling and inflation, for support the economy . We think it will be the latter. This is exactly what they did with the global crisis. Anna mark carney said just last week that sterling needs to find its level, suggesting he is not doing anything to help them. Manus how i important is it for you in the discussion, who takes the power of the conservative party . Because that is the critical issue, maintaining access to the european market. Is that the rub for sterling . Is that the deciding factor in sterlings demise . Clearly, there are market implications and it can affect the negotiations. I think the europeans will be more open to a compromise in this case. Everybody will be following this negotiation. Negotiations proceed relatively faster, it will be good for the economy. ,nna Athanasios Vamvakidis thank you. He stays with us this morning. Manus up next, the Top Oil Trader tells bloomberg that oil oil. Eaking through 60 we will tell you what the ceo said in his exclusive conversation. Anna welcome back, everybody. This is countdown. Lets get to the bloomberg first world news with Rosalind Chin. Rosalind australias centralbank weighs the threats from britain quitting the European Union. 1. 75 . H rate is the bank said is these inflation remaining low for quite some time. It sees inflation remaining low for quite some time. Saudi arabia has been hit by three suicide bombings. The first hit one of the holy shrines. The third explosion happened in the u. S. Consulate. Waves of attacks have killed hordes of people across the middle east over the last two weeks. The u. K. s third of party will ballot the five contenders hoping to succeed David Cameron as party leader and prime minister. Theresa may has secured the most endorsements from colleagues and is the favorite. But the Energy Minister gained the backing of the former london mayor and highprofile brexit campaigner, boris johnson. Has gone off a cliff in the wake of the brexit vote. The comments came in a survey carried out. It show the confidence had dropped and pessimism about the Economic Outlook had almost doubled in the weeks following the referendum. Juno spacecraft has successfully entered orbit around jupiter. [cheering] ne for burnthe toe cut off. Juno, welcome to jupiter. Rosalind the news was met with cheering, clapping, and hugging in california. It is the closest encounter yet with the biggest planet in our solar system, 500 million miles from earth. Global news 24 hours a day, powered by 2600 journalists in more than 120 news bureaus around the world. You can find more stories on the bloomberg at top. Manus . Manus asian stocks have dropped for the first time in a week and commodities have slumped amid fears regarding italian banks and the brexit. Nejra indeed, there is a lot of uncertainty out there. We can see these losses on the pacific asian index. But this benchmark, also dropping from a threeweek high. The banks and Energy Stocks are leading the losses. We can see brent below 50 now, 49. 56. Estimates are showing the nigerian production rose last month. And i wanted to highlight nickel, because that is dropping some 3 from an eight week high, snapping five days of gains, following, along with other industrial metals, such as silver and gold. Looking at the safe havens, we are seeing money move back into the yen. The yen, approaching at strongest level in two years. Versus the dollar, beginning against most of its major peers. Finally, i want to take a look at the aussi assets, as Rosalind Chin reported, the ra was ba was keeping rates unchanged. Before that decision, the 10 year yield hit a record low. Then, we thought a little bit of recouping of its losses as the decision came out, but it has fallen back a bit. Anna getting through 60 oil will be difficult because that is when some u. S. Stations come back online. That is according to ian taylor, the ceo of vitol. Manus he spoke exclusively with bloomberg. Ian the signs are from the u. S. That they might be beginning to come back a little bit. They have a lot of oil and the system and it will take them considerable time. So, the picture with u. S. Inventories is the picture globally . Ian taylor yes, i would say that is true. The one thing i think is interesting obviously, the u. S. Is the place on shore where we have the biggest production. Again, with iran, we had the biggest increase. But that oil has gone east. Whereas we have a little bit less oil in the west. Since you mentioned u. S. Production, we have gone from 9. 6 Million Barrels to 8. 9 Million Barrels. What would it take in the states to seee production return . Ian taylor it is a really difficult question and we are still trying to understand all of the economics and the different basins. Some basins look great and some do not look so good at this price level. It is very difficult for us to tell. Certainly, one of the reasons we think getting to 60 will be difficult is because we believe some u. S. Oil basins will come back at that price level. So, it is hard to know at this point in time. We are still learning about the economics. You should ask the producers, they probably know more, better than we do. 55 ore you get to 60, you start to turn the corner. What do you see in may and ju ne . Ian taylor we think that number will come down a little bit more, but not significantly more. Oh, really . Ian taylor i am always a little nervous but reading too much into one months production. This is an art, not a science. Sure, so the u. S. Has bottomed out, in terms of production . Ian taylor there are some offshore projects that will still come online. Sorry, onshore production. So, onshore, yes, it is almost done. We have the story the rate cap had its best month of the year, adding 11 rates. Which is not saying much, given how much the rate count has fallen. Again, ive been coming back is a bit of an overstatement. You mentioned the permian basin. Ian taylor the economics for the particular basin look good. We are likely to see some continued extension in that area. They have got great wells and costs are low. So, yeah. That looks to be the best basin. Tand at inventories standar 27 Million Barrels, a 3 drop since april. If you analyze that, that is an 18 drop. Can we anticipate that steady decline . Taylor you cannot extrapolate that much. But the u. S. Has still got a lot of oil there. We still have the ability of course, in the u. S. To quickly import off the he was gulf coast. Off the u. S. Gold coast. So yes, i think stockpiles will come down. I can see the market roaring ahead because we have so much work. Anna that was Ryan Chilcote speaking to ian taylor, the ceo of vitol. Athanasios, where do you play the oil story now . We have seen these in gains here today on the back of this Higher Oil Price we have at the moment. Athanasios there is a lot of oil, but there is strong demand. Global growth has been weak, but it is picking up. Emerging markets are also growing. So, the market perhaps, was too pessimistic on energy earlier this year. We are bullish. We expect it will be choppy, but most likely by midnext year, we will be prices around 70. Manus so, we get back to 70 and that is a heck of a anna that will be by next year. Manus how does that translate to fx . I pulled up the em currencies. Ringgitt and the ruple. A much higher will be ruble go . Had a play that through the fx space . Athanasios it is not only that oil prices were low earlier this year. The entire commodity complex was low, and now they have all been recovering. The market has been sure and now volatilitye dropping, this is good for the fx. Manus the argument with oil, the dollar supports the price of oil. Or is it the demand side . Ceo,u listen to the vitol he is talking about supply coming out of you are ears. How do you get to 70 . Athanasios stronger demand and supply will take time to respond. Supply dropped because of the very low oil prices earlier this year. It will take time to respond to stronger demand. Anna the kind of impact does this have on inflation, then . Kind of impact does this have on inflation, then . We are still talking about a lack of inflation globally, army . Even arent we . Athanasios that is a very interesting question. Even if Oil Prices Stay where they are, it will likely lead to inflation surprises, particularly in the u. S. Inflation is actually not that low. Core inflation is at 2 . And the feds Monetary Policy is the most accommodative it has ever been. It is most likely that we will see headline inflation converting to 2 by next year. Manus and edwards is never far anna edwards is never far away from a work function. Anna bring it up. Manus what does that actually do, in terms of the timing of rate hikes . The propensity of rate hikes in the United States of america. Literally, there are no hikes in the cards before christmas. That is for sure. Anna there is a 12 chance on christmas. Manus and there is a 35 chance on my birthday of next year, my birthday. Athanasios the fed has been able to be on hold because inflation is low. Manus but if we have surprises, what will this do . Fed will have to persuade the market that they are willing to overshoot their inflation target. The market will expect that definitely, the fed cannot keep ignoring inflation. At some point, they have to hike, this but the market. Anna before we were worrying about brexit, everybody was trying to figure out just how hot janet yellen would let the u. S. Economy run. There was a feeling they would allow the u. S. Economy to run a little bit hot for a while to create inflation. Will that be the mentality they approach this with, the you do you think . Athanasios most likely in the shortterm, yes. They will have to sacrifice to focus on inflation. Manus we started the hour on countdown. About the about the great demise. The fed are happy with this variation in the dolla. R is that cyclically shifting lower in terms of where we go with the dollar . What is your call for the dollar going into the back of 2016 and into 2017 . Athanasios we expect a stronger dollar against the european currencies, particularly cable and the euro. But most likely, it will continue to be stronger than the u. S. Dollar. Emerging markets, they were overall bullish. One, we have to be selective. Anna athanasios, thank you. Athanasios vamvakidis stays with us a little bit longer on the program. What is next, manus . Manus we will ask a venture capitalist, what does the brexit mean for the economy . Anna welcome back. This is countdown. 6 27 here in london. Lets talk about china now. There appears to be a little relief for the chinese stock traders. It looks like 2. 7 on the shanghai composite, which would be a Third Straight quarterly decline. Manus we are now joined from hong kong. Stocks are already among the poorest performers of the year. The question is, are all the Retail Investors washed out . The general consensus is that this is going to play out not so happily for chinese stocks over the next couple months. The problem is, about it he to 90 of chinese stocks are held with Retail Investors. Phone economy has hurt the slowing economy has hurt these investors. So, all of these things are hurting capital outflow pressures and increasing pressures on stocks as well. An 2. 7 is not too great estimate for the third quarter. Anna there is the possibility of another yuan devaluation. Is that another reasonable expectation . I am not sure if that is going to happen right now because what the pboc has exceeded in doing post brexit, they dont really need a sudden devaluation to weaken the currency by about 1. 2 . If you remember, the whole devaluation concern that happened in august last year was about a move of about 2 . I cannot sure they want to spark the same kind of market like they had in august last year, by doing a devaluation when they are succeeding against trading partners. Manus who needs a crisis when you can devalue . Athanasios vamvakidis is with us. Who needs a crisis . You can slowly shuffled devaluation. Athanasios that is the point. China has monitored this very well. It came out of the blue that we are losing external reserves. Now, external shock is giving them an excuse to focus on the dollar. This has made it a very much easier situation. Anna is that the secret, telling everybody, stop obsessing with with the dollar . They can do this without triggering any panic. Was mores the market concerned because they would take this as a signal that things were worse than they to thought. Now, by talking to the market, they have addressed this uncertainty. Manus one central bank that is going to talk to the Central Market is the bank of japan. Here we have the dollaryen and the forecasts, which everything to keep up with the shifts in the dollaryen. Yuan will ben the athanasios 7 by the end of the year. Manus what does that do to the boj . Guy athanasios they have been easing, but what is driving them is the pursuit of abenomics. They cannot introduce any fiscal measure. Japan is attion in what point will the market start pricing in the money . This is an inevitable game in japan, but we are not there yet. Manus before he go, what is helicopter money . Athanasios in this case of japan, that means a permanent extension of the money supply to fund the deficit. From Athanasios Vamvakidis bank of America Merrill lynch. Manus the brexit is pervasive and it is hitting business expectations. They have gone off a cliff, all in the wake of the brexit vote. Anna these comments came in response to a survey, which showed that confidence dropped. Pessimism about the Economic Outlook almost doubled in the week following the referendum. Manus how might this affect startups and other businesses right here in the u k in the foreseeable future . Here to give his insight is the former telecom ceo. Great to have you with us this morning, anthony. So, you have flown in. The country is in a state of a crisis. Or a flux. How do you look at our country now as a destination for capital . Has your risk monitor ratcheted higher . Anthony what is really interesting is this has been a good news story for the last of her of years. There has been tremendous growth , up 70 year after year, from 2015 to 4014. From 2015 to 2016. All of that growth was driven by stability, by certainty of immigration policies, certainty of trade, certainty of tax policies. No longer, necessarily, any of that can be reliable. Anna even before this happened, we had people working in the start up industries telling to us here in bloomberg, one of the Big Questions is whether we can get a hold of the right talent. Is this going to be a tougher challenge . Anthony the biggest risk in any start up is the availability of talent to grow a company quickly. If you cannot draw from the biggest potential pool of specialized labor, there are these very narrow areas of research. Right now, germany looks very attractive because you can draw more easily from a much bigger pool. Manus one of the things the will tryr in the u. K. To do, he will try to bring Corporation Tax lower. Startups have a very unique proposition from a tax point of view, but this kind of banner waving chancellor of a lower tax britain, does that for you say, this guy my actuallight actualll one out of the bag for us . Anthony well, i love risk. I think there are going to be great opportunities. Area is this additional of uncertainty. What does this mean, though . It will create buying opportunities because evaluations are going to come down in the u. K. Take a start up in the u. K. And in the germany, same size company, same state of growth. Anna but, if the pound stays weaker, maybe there will be a little more of a u. K. Start up that looks tempting because it is cheap from a currency perspective . Anthony also, the export becomes exciting. If you are a u. K. Based company, you have bigger revenue coming from abroad. Manus if the pound is cheaper, you pick up an asset, and you move the headquarters to germany. Is that what you see happening . Theony the start oup in u. K. Is sophisticated right now. Other than silicon valley, the u. K. Has established itself to start a company. Why not scale a company in the u. K. , but if you need an hq, you need an hq. Anna that tax incentive is to wendell and now, tax incentive is dwindling now. Us. Ony lacavera, joining up next, the british leadership contest. The first round of voting for their next leader. We have analysis next on the program. This is bloomberg. Manus the race takes off. Tory mps prepare for the first line of voting to elected britains next prime minister. Boris johnson asked andrea let some. Brexit accelerates, deflation in the pound, and the bank of england governor is set to address the threats facing the Financial System. The rba stands past. The governor keeps rates on hold. A surprise and softer crude; the ceo says that wont rise much further. Yes, i think the levels will come down as expected, but i cannot see the market really roaring ahead. Manus a very warm welcome to countdown. Anna just gone 7 00 here in london. Breaking news from some u. K. Base corporates. A lot of places in the housing sector in the wake of the brexit referendum manus this is a trading statement, given us their firsthalf revenue of 1. 40 9 billion pounds. The average selling price in the United Kingdom comes in at 2005000 pounds. 2005000 pounds. The real impact is probably a little too early to say how that is going to impact the overall numbers Going Forward at the moment. As we get a little more detail, we will dig into it. We have futures set for a slightly better opening, a small relief in london by 7 10 of 1 versus the rest of europe. Anna the london market, a lot of commodity related businesses. What we say sometimes when we see Commodity Prices going higher, thats sometimes even enough to help the ftse 100 outperform, which could be the reason. Lets show you where we have been overnight on various assets. Msci retreating from a threeweek high, tenure u. S. Bond yields and here for you as well, 1. 42 . Out for nonfarm payroll numbers. Seen bank of America Merrill lynch just before the break, talking about how helicopter money is now inevitable in japan. Silver is in there because we have seen a really strong rally, coming off at 1. 9 , back below 20, the biggest today increase in five years, as we saw earlier this week. This simultaneous move into equities and into Precious Metals. Nymex is in there as well. Manus lets have a look at the bond market, because we are making new record lows. The u. S. Was closed yesterday in terms of cash bond trading. These are the german bunds, virtually unchanged. Yieldseeing record low across the globe, the United States by trading is up and running again in the asian session. Im just putting up the ggr function, u. S. Treasuries lowerg at another lurch in terms of the United States. Anna lets get the first word news with Rosalind Chin. Rosalind Australias Central Bank has held Interest Rates as it raises Investor Confidence of an inconclusive general election and the fallout from britain quitting the European Union. The rba governor left the cash rate at 1. 75 , as forecast by every Economist Survey by bloomberg. Saudi arabia has been hit by three suicide bombings with four People Killed in an attack near the mosque in medina, one of the holiest shrines in islam. The third explosion happens near the u. S. Consulate. It extends a wave of attack that have killed scores of people in the past two weeks. U. K. Business expectations have gone off a cliff in the wake of the brexit. The comments came in response to a survey carried out which showed that confidence drops and pessimism about the Economic Outlook almost doubled in the week following the eu referendum. The ceo of the worlds Top Oil Trader says oil prices will not rise much above current levels. Slowingian taylor that refinery practices were to blame. Expect it to be a little bit higher, assuming demand continues to increase, which i think it will. We will be in the high 50s or early 60s. That would be at the end of next year. 60 oil. 6 i could see that. Junoind and the spacecraft has entered orbit around jupiter. [cheers and applause] rosalind cheering and hugging at the control center in california. Juno is 500 million miles from earth. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Manus thank you very much for the update. Lets check out the markets haidi lun is standing by. Reality check, is it . Haidi yeah. Chief listen to the executive of Partners Capital international here in hong kong, he says we have reached a peak, because there arent many positive drivers globally that will keep pushing sentiment upwards, and that is probably a fair assessment. What you have snapping this fiveday winning streak, asia falling for the first time in about a week, down about half a percent regionally, steep losses coming through from australia, sydney down by just over 1 . We still have the political stalemate, and voting has resumed today but it is unlikely we will get much of a clear picture on exactly what the government will look like as we go into the coming days. Didnt help sentiment very much in terms of the session. Around the region, the yen is back in favor, strengthening about 6 10 of 1 in the days session, very much weighing on equities. In particular, this currency story is heavily weighted, one of the top decliners by over 4 . Certainly this exporter story is playing out sharp. Some of the carmakers are also being followed off on the back of that stronger yen story. Here in hong kong, we are seeing chinese stocks in this part of the world also seeing losses coming off that week high. Some of the casinos are doing quite poorly, china galaxy down by almost 3 amid expectations that the slowdown will continue to take hold, particularly in thmacau. It is interesting that we see Greater China up by half a percent, bucking the downtown we have seen around the region. We did have a report coming through from domestic media suggesting that going into the second half of the year it will continue to finetune policy. Whether that means wholesale easing by way of an Interest Rate cut or more of the liquidity management that we have seen over the past few unclear, but it does look like investors are still doing ok when it comes to that chinese market. Keep in mind that this is still one of the worlds worst performers, down about 15 still, even after that recent rally. Lets take a look at the movers. It was a Precious Metals story, heavy gains on the back of gold yesterday, giving a lot of that movement. The commodities rally has seen something of a reversal. Mining, chinas biggest gold miner, down. Mine is feeling that pullback. Australia, gold miners are down about 1 , but we do have a few outliers, new crest managing to close out the session more or less flat. A little bit of a pullback, surprising given the lack of capital we have seen to drive the markets ever higher. Anna thank you very much. Haidi lun in hong kong. Back to the u. K. And the conservative party, today taking the next step towards selecting the next prime minister. All 330 conservative members of parliament will be balloted on the five contenders vying to succeed David Cameron. The one receiving the fewest votes will drop out of the race when results are announced at about 7 00 p. M. Local time. Manus theresa may has secured the most public endorsements from colleagues and is the bookmakers favorite, but andrea lesson yesterday had a poll of Party Members and won the backing of boris johnson. Anna before that, mark carney will address the threat facing the Financial System following the brexit vote in a News Conference this morning. Well be carrying that in full and you can watch it at 11 00 a. M. U. K. Time. Manus bloomberg users can follow the reports release and the News Conference, all on top live. Thats half an hour before the event. Our next guest is the cio at connor probably. Thank you very much for joining us, kicking off the markets review. The chancellor, floating tax cuts, carney ready to get out his toolbox in terms of a much more extensive policy response. What are the policy responses that you expect to see in the near term, and when do you expect them . Is it going to be for us around this table, or all about corporate s and attacks . And tax . We have are they seem with a will do on tax that will take a while. The most interesting thing would be Interest Rates from the bank of england. That could be done at pretty much any time. I thought that they might take a little while to consider that move, as mark carty said last week. Some of the events we have seen over the last week, particularly in terms of repercussions of the property sector, probably will bring forward that policy response. Whether that will have a big impact from a very low rate of interest is open to question, but the important thing is the signaling, and that says that there is a plan. Carney talked about a plan. Anna let me ask you about the property sector. Just this morning, manus is reporting its too soon to say what the impact will be of the brexit. We heard overnight, stock and trading in two of its property exceptionalng about market circumstances following an increasing redemption request from the referendum. Is this one of the first signs of the market gumming up in response to the brexit vote . Yeah, absolutely. The Property Market has been the first to feel the heat. It started the day of the vote through the big, listed London Real Estate investment trust, the likes of british land, which has big exposure. They where an obvious sector in the crosshairs. But since then it has reverberated throughout the properties sector. Even Property Companies that dont have a lot of exposure to london saw their shares come off, and states opened up to their asset value. Beingnded funds are forced to gate their investors, because of course everyone will even put itthere, on the sidelines or reinvested in listed companies at big discounts. Anna so going into those we are listing. Theres always an arbitrage. That is why i think its inevitable that all of the funds will now start the domino effect. Manus in terms of this opposable straight, with Gordon Johnson said that the pound wouldnt take that much of a hammering lets take a look. We have a great chart. The empires demise over the past 100 years, where the pound has gone from 1941. The imf getting involved in the United Kingdom, thats those issues come to play again. Is this something that could bolster the u. K. Property market . Ftsee only reason why the 100 is back above this level of brexit . Is the pound on a bigger trajectory lower, and what opportunity does that profit make . First of all you are right,. Its one of the key reasons why the ftse has improved. Its the translation effect of earnings, pretty straightforward. We have aens freefloating currency in the u. K. At the moment, which has made this initial adjustment of 10 , offsetting some of the other effects on the economy. Hasnt found its level . Not so sure. Well get a better sense as things develop. A longterm trading rage against the dollar was somewhere between 2. 1. 40 to the empire finished its decline at the end of the late 1970s; since then we have been in a trading range. 1. 40 was the basis. But we have broken it now. I think those levels could be back on the table, somewhere around 1. 20. Will, provide a boost to the u. K. Economy. It makes our exports more competitive. The big but right now is that there is such uncertainty about terms of trade anna and what we are able to export. Right. So the effects of that will be david from where they normally are. And that would argue for further depreciation. Anna ok. Thank you very much. The ceo of connor broadley. Worldshe head of the s biggest oil traders says crude wont rise much further. Want to find out why . Stay with us. This is bloomberg. Anna welcome back. 7 18 here in london. Gloomy out there. The pound against the dollar, 1. 3231. We will hear from mark carney and what he has to say about the pound. Lets get the Bloomberg Business flash with haidi lun. Haidi thanks. Suspending trading in its 2. 9 billion pounds u. K. Real estate fund. Its the strongest signal yet that the terminal from the brexit vote will probably hit the Property Market. The suspension of the fund will be reviewed every 28 days. They adjusted the value of the underlying upset by 5 last week. The Italian Government is reportedly studying a capital plan without saying where it got the information. Lufthansa said it could include new medical bonds. According to the paper, they worked at least 3 billion euros. Told itsan sachs has Asset Management staff to tighten their belts amid poor performance, according to a report in the financial times. It says that executives have issued an edict that 2000 employees must cut spending, including a ban on travel not associated with meeting clients are winning new business. And that is your Bloomberg Business flash. Manus thank you very much. Crude prices wont end the year higher than the current level, according to the head of the worlds Top Oil Trader, speaking exclusively to bloomberg. Ian taylor told Ryan Chilcote what he sees holding oil back. I think there are special factors in the second quarter, kuwait strikes, canadian wildfires, all helping to reduce supply, helping to keep the market a little bit of a tighter field. Imand continues to be good, think they have done pretty well. I would say, yes, the market feels that maybe we have a slight balance now. Having said that, second half of the year, i think we do still expect to see a little more draw from the u. S. For onshore shale, and that goes through to the actual stock levels, which is still pretty high. But as i mentioned, iran is doing pretty well. Weot of oil going east, and are seeing extra product coming out from refineries. Traders always get this wrong, but i would not be surprised to see us ending of the year not far from where we are now. Ryan when we spoke six months ago, you said 80 per barrel. You have got more bullish . Maybe a tad. I when we last spoke, we hadnt had all these interruptions. Markets are starting to correct themselves that they are taking more out of the system. Ryan 2017 . A difficult one. And thet cuts in capex, majors will affect production. Having said that, we do still see some nonopec fields drawing back. Youve got things like caching coming on next year. Probably in the back end, more offshore u. S. Gold. The stakes will be a little bit higher. Assuming demand continues to increase, which i think it will, maybe a slightly lower rate. I think we will be in the high 50s, early 60s. I always give a health warning, you know that. Ryan at the end of next year, you see 60 oil . I could see 60 oil, yeah. Vitol ceo. Was that thv we have a comment coming through on radio from the european commissioner, talking about how the comments we have heard from the chancellor, the tax cut he proposed is not a good initiative. What do we read into . What did you make of this pledge to get tax out . It seems like a lot, but there was a plan to get down to 17 already. There was. And this is all about signaling, really. He is indicating hold your horses, dont go anywhere, there could be good things in store down the line. Occurstening to this, it to me that there may have been a secondary objective, to put a bargaining chip on the table with the eu, to say, look, we can be disruptive anna if you can compete on tax. We can be a Good Neighbor or bad neighbor, and we can be a bad neighbor. Manus when we talk about haven and we talk about gilt, what i have for you is 30 year and 10 year government bonds, which are lurching ever towards new record lows in both of these markets. Im thinking about the gilt market. Today will be one of the first auctions postbrexit. It looks as if he then is trumping Credit Rating is trumping pound. Ae the better value than dollar bond . Yeah, they probably do look quite good to a lot of investors, if you have a shortterm perspective. There is certainly momentum behind them at the moment. Ind look at where a rate europe is at the moment; any yield is good yield when Interest Rates are negative in europe. U. S. Higher rates are trending lower as well. That is why in the shortterm, i think these yields can go lower. But in the long term, when you plan on the basis of that rate of return, it still not very attractive, still below the likely rate of inflation. From a longterm perspective, im not sure theyre is sensible investment play. Some time ago they were quite a lot higher than that, adding gilt to their college fund. But in the world with the whole swiss market negative, it looks positively sterling. That is the shortterm perspective, but i think gold looks more interested. Anna you talked about property and the fact that we have seen Standard Life trading two of their property funds. You mentioned in the break other funds that might have to do some thing similar. Is this in danger of becoming systemic, something regulators need to get across . I think regulators will be watching this closely. Property, especially residential it also commercial, is crucial for the banking system. This sort of disruption these things normally happen only at the end of a recession, and this has happened within a week. That will get them twitchy. I think they will be watching a pretty closely. Quite a lot of this, actually, is this arbitrage opportunity manifesting itself. Its not a systemically worrisome thing, but nevertheless, it will get the attention of the bank of england. Anna thank you very much for joining us. Conner at, broadley. Manus europe is looking at a lower open. Its too early to say how brexit will affect the whole market. London up will it last . Anna a shot of the city of london. We will see you tomorrow. Guy welcome to on th guy welcome to on the move. Im alongside caroline hyde, and here is what we are watching. Carney cracks open the toolbox, the bank of england governor speaking at 11 00 a. M. Today can he soften the economic flow of brexit . Banks battered. The u. K. Wreaks havoc from italys recovery. Is there a Silver Lining to be found here . And not so bullish. Vitol ceo eve