Anna a very warm welcome to countdown. I am anna edwards. It is just past 6 00 in the morning on this friday morning. Lets talk about what has been happening with sterling. We heard from mark carney at the bank of england in the latter part of the trading day yesterday, and we can see the effect that had on the pound, not the one highlighted in red. Yes, in fact, the one highlighted in red. There was little bit more stability coming through in the pound in the wake of the big falls we saw last friday. In the wake of that, weve seen a little bit of a recovery or stability in the pound, and that took another leg down as we heard mark carney speak. Saying, brexitr may prompt summer policy easing. Lets check out the msci asiapacific, a decent session the last couple sessions in asia, and today, up by about 0. 5 . Is this based around for bets, more stimulus coming through from the central bank . We will discuss that. Weve got silver in here, and that is up strongly, up 2. 4 , the biggest increase in this week in more than a year on silver. Brexit has been kind to some of these precious metals. Dollaryen , 102. 89. This is set for its biggest weekly drop, that is the yen, since may. Repaired around half of its brexit vote surge, which is quite spectacular when you consider the extent of the yen buying we saw in the wake of the vote. We will discuss what is moving the markets further in a riskon progression direction. Lets get the bloomberg first word news. Here is rosalind chin. Lind data out of japan shows a lackluster month for the worlds thirdlargest economy. Household spending stagnated, and inflation excluding fresh food fell 0. 4 from the year before. The latest official figures show chinas Manufacturing Sector treaded water in june. The pmi fell to 50, the dividing line between improvement and deterioration. As for the Services Sector, it continue to improve with the official gauge rising to 53. 7. The justice secretary michael gove is set to make his case to be britains next Prime Minister. That is after he betrayed Boris Johnson who pulled out of the race yesterday. Now his sights are set on the home secretary, theresa may, the early favorite, and three other candidates to head the conservative party and the country. Apple is said to be in exploratory talks to buy jayzs tidal. Sayswall street journal negotiations continue, but a deal is by no means certain. Forl was bought by jayz 2d 6 million in march of last year. Apple recently revamped the music subscription service. Hong kong is marking the anniversary of its return to chinese rule. The chief executive led the ceremony 19 years after the handover of power. Prodemocracy groups have promised demonstrations. They will be unhappy about candidates being vetted by asian before being put forward. You can find more stories on the bloomberg at top. Anna thank you very much. Lets get the latest on the market action. Haidi lun has an update. When you consider where we were this time last week, weve seen quite an amazing rally in some thets in the asian session, equity markets, and even the yen. Haidi thats right. We have been saying this quite a bit. Its almost as though brexit never happened. We are back to where we were before the u. K. Referendum. Of course, other than the emotional roller coaster everyone has been on over the past five days. Take a look at what we are seeing. We are seeing this rally extended into the last trading day of the week and the First Reading dave the quarter. Very strong gains. Expectations of more central bank easing everywhere from the bank of japan, the bank of korea, already coming through with their fiscal stimulus measures, and also those comments coming through from the boe governor and expectations that the ecb will loosen in some ways in terms of the bonds they do. Given that we had that fairly lackluster read on the inflation particular and the survey, slightly better than expected, but in light of this yen situation and the weakness of abenomics, theres a lot more talk about what the bank of japan can do when they next meet. We are seeing gains of 6 10 of 1 when it comes to the tokyo session. We are doing well coming out of australia. They are off those session highs. We have the federal election taking place tomorrow. A little bit of risk aversion as traders try to work out which way that vote is going to swing. Weve got a good rally coming through from south korea despite trade data showing that most a sense of stabilization. Not much of an improvement. Shanghai is lagging, up by 1 10 of one thing percent. It has been pretty range bound for much of the session. We are hearing expectations that will have to do something after those pmi numbers you just went through. Matching expectations, but no pickup, and a lot of analysts are saying there room for the central bank to move perhaps if we dont get the rrr cut or the wholesale Interest Rate cut. We could get targeted liquidity measures. We are seeing weakness coming through from southeast asia. Malaysia is up i 3 10 of 1 . India, really extending this rally we are seeing, putting on another a tenths of 1 . Foretty good way to add up a tumultuous week. Anna an emotional roller coaster. The bank of england has signaled a rate cut within months as it tries to shield the u. K. Economy from the shock of leaving the eu. Governor mark carney says he wont hesitate to act to shore up the system, and he is considering what he called a host of measures. The material slowing growth at the npc identified as a risk associated with the referendum looks likely to be our central forecast. It seems plausible that uncertainty could remain elevated for some time with a greater dragon activity drag on activity than we could have anticipated. Its effects will be reinforced by tighter financial conditions. Monetary policy cannot immediately or fully offset the economic implications of a large negative shock. Moreover, the future potential of this economy and its implications for jobs, wages, and wealth are not the gifts of Monetary Policy makers. These fundamentals will be driven by much bigger decisions, by much bigger plans that are being formulated by others. What we will do is to continue to relentlessly pursue monetary and Financial Stability, and by doing so, facilitate the adjustments that are needed foristent with those plans this economy to reach its full potential. The Economic Outlook has deteriorated, and some Monetary Policy easing will likely be required over the summer. It would be irresponsible of me or any of my other colleagues to walk away from those obligations. Those are our obligations under statute. Anna at the end of the question and answer session, carney defended the warning he had given in the lead up to the referendum. We said in terms of the risks to the Economic Outlook, in terms of the risks to Financial Stability, does anyone not think that those risks have begun to manifest . Does anyone in the country think those risks have not begun to manifest . Anna with us to discuss, Michael Osullivan, cio for u. K. , Eastern Europe banking at Credit Suisse. Talk about what Central Banks are doing to cope with the situation we find ourselves in both in the u. K. And more broadly. We have heard from the bank of england. What are your expectations from the boe . We have been through three phases. We are in the third phase of centralbank action. On friday, there was verbal intervention from Central Banks. Utright had op intervention, the Swiss National bank, perhaps the bank of japan, and the third phase is they are beginning to signal changes in Monetary Policy. That is increasingly limited, and they are running up against the limits of their own action. Worry, a bit like the politicians, that some of the actions from the Central Banks will have negative impacts gone if you look at where the Interest Rate curves are getting pushed into further territory. That is not an outright positive for savers, for insurance companies, the Financial Services industry. There is a well held view abroad that more qe is not what we need. It just stores up more problems. Anna is that what we are talking about . We had the chart of sterling during the press conference mark carney gave. The market factored in further assistance from the bank of england. What does that look like . As he said, he was channeling Timothy Geithner when he said a plan beats no plan. He is sort of working in a vacuum. What will the easing look like . Will it look like a rate cut . Will it look like you we . Like qe . It was quite a punchy performance from the governor. I guess some of the comments made about him from people in the leave campaign i suspect they will start with a rate cut. They will leave more qe, more of these funding programs that worked quite well in 2012 and 2011 they will keep that in store for perhaps around october and november if there are signs the u. K. Is going into a deeper recession. Im not sure economically what a 25basis point cut in rates will have. Given where the Housing Market is, its expensive. Its coming off a high level. Im not convinced a rate cut can bolster that. Anna he put up a defense of things he said running into the banks, notnd central just in the u. K. , but around the world, have done a lot in terms of liquidity over the last few days. I want to show you a chart of how libor reacted. I cant. Very well behaved. Anna is that a victory for central banking . Its a victory in some respects for central banking, for banks who have planned around this event. It shows perhaps that some of the changes to the Banking Sector postcrisis have worked in that banking liquidity and the trust of banks and the trust of banks in each other is more stable than it has been. I think that is good. We wouldnt expect the banks to react in this fashion. When you look at u. K. Banks, profitability is going to be an issue. Anna let me ask you about the ecb and how they will respond to the brexit crisis. They had a shortage of assets to buy, and now bloomberg had a story out late yesterday that suggested some governing Council Members are in favor of abandoning what is known as the capital t. Buy in line with outstanding debt levels. Ive got the chart that shows the italiangerman 10year spread. Some people are suggesting, hang on the second, there will be some governing council who will want that. How much do you think we are waiting for the ecb to move away from this t . I think weve got to be very careful. To some peoples eyes, theres no crisis. The footsie is well above where it was this time last friday. Banking liquidity is very stable. Currency volatility is beginning to die down. To the extent Central Banks may want to stand back and let the , onet begins a clear itself some of the news brought on bloomberg last night, politically, this is quite dangerous for the ecb. It effectively means they are taking more risk. Finland has to be very controversial. A lot of people think qe from the ecb is not stoking the european economy. Its not actually having an outright economic effect. Anna thank you very much. Michael osullivan stays with us. Here are some highlights for your day ahead. An ecb executive member speaks of the French Finance Ministry at 8 15 u. K. Time. What will he say about t . We have a slew of u. K. Many veteran pmi. Data for the eurozone as a whole at 9 00 a. M. At 10 00, we get eurozone unemployment, and at 11 00 u. K. Time, michael gov sets out hise case for being the next u. K. Prime minister. At 2 45 p. M. U. K. Time, we get manufacturing data out of the united states. Coming the radar today, up this morning, we will be talking to the newest fed president , james bullard. He will be with us on surveillance at 10 00 a. M. U. K. Time. Barclays briggs it did. Blames the fall in the banks shares on fear. The interviews coming up next. This is bloomberg. Anna welcome back. This is countdown. The time in london is 6 18. Secure jeff daily says concerns about earnings have caused a significant dip in the banks share price. Speaking to Erik Schatzker in london, he says the banks performance is weighing heavily on investors. The important thing is for barclays to be there for the public of great britain, to be there for our consumer clients, Small Business clients, with credit, advice, services. We thought a lot about the referendum, and it obviously went one way. That will have economic consequences. Barclays is going into this ,rocess with its eyes wide open its people very motivated and committed to the economy of the united kingdom. I take it erik that the answer is yes, you can withstand the challenges . Sure. Erik your leadership skills are going to be tested like never before, perhaps. Are you ready . We will find out. We have spent 13 months getting ready for this referendum. We had the full executive Committee Meeting four times a day beginning thursday. Day . Four times a it was to make sure we knew what was happening in our branches, our call centers. On friday alone, we made 5100 loans to Small Businesses across the united kingdom. To know what is going on in the Foreign Exchange markets, we had three times the amount in our systems compared to the regular day. Think we are very prepared, and i feel terrific about how the bank handled itself. The other thing that is quite different from what we see we have seen in previous financial crises was the communication between the banks and the regulators. We were on the phone with the new york fed, etc. Theres a recognition that come in order to avoid the next financial crisis, banks and regulars have to be collaborative, entering this referendum, that has shown its colors. Anna jeff daily talking about the situation room. Somehow, brexit has been a blessing for u. K. Megacaps. The ftse 100 index loaded up with multiNational Commodity producers, drugmakers, and banks. More than that, mark carneys reassurance that the bank of england will loosen policy sent the gauge to its highest level since august. Michael osullivan is still with us. We picked me up on referring this to a crisis, suggesting there are many areas of the market where it feels like anything but a crisis. You say its too early to load up on risk. Is that right . Where are you investing in the moment . We went into brexit being quite underweight equities. If you look at the fundamentals, growth, earnings growth. Even in the u. S. , the picture is not rosy. The rally we have had in the past couple years days has been quite odd come in that it has been driven by positioning, hopes that brexit wont happen. Dashed asey will be we get through september. For certain indices like the footsie, the big exporters are going to benefit. There are two phases of this crisis coming up. One is we are going to see the imprint of brexit on the macro data. Weve got the u. S. Isn. What is interesting, if you look at some of the highfrequency stuff, that shows a big drop in spending by people in the u. K. Since the weekend. We can see the impact of deferred spending and investment. Mark carney was adjusting we had posttraumatic stress from the. Lobal financial crisis is that we are concern is, what consumers do, or how businesses invest. Gdp isimprint on u. K. Going to come from several avenues. Bank lending may not be as easy as it was in recent months. I think you would see a lot of deferred spending by companies. People have said a, when they look at i. T. Budgets, etc. , they are trying to advance with as little of that in place as possible. Years tog to take 12 be absolutely sure as to what the new regulatory trade environment in the u. K. Is. So many unknowns. What is the big issue for you for banks. Is it the question around pass porting . Terms of that sector and how interested you are in it, is that the biggest question . Pass i can porting is a big issue. In terms of the trades themselves, you may see other European Countries try to cherry pick back to paris. Its a big story already. If you look at a place like dublin, there are limits in terms of the Housing Market. Paris has its own problems. I dont think theres going to be a wholesale flight of Human Capital out of london. The margin of growth of the city is now capped for the next two years. Lects i have heard some i have heard some bankers talking favorably of edinburgh besides from the weather. You been looking back at these big market events. What can we learn about how this one performed . One of the reasons we are still underweight equities and not taking risk right now, if you look at the asian crisis, lehman, you only get the realization of the magnitude of this in the market about eight or nine trading days afterwards. If you look at performance and volatility. It comes in the week after the event that volatility begins to pick up, as people piece together the economic and political implications. This week, i think maybe people have only been looking at the good things that came from the referendum, the possibility a brexit doesnt happen, more qe from the Central Banks, and next week, reality will hit. We are not over the initial reaction really. I dont think so. I think there are other avenues. One that is going to be important is fx. Had a massive bout of weakness. This may break the truce in currency wars. Keep an eye on the chinese currency, because that is been weakening steadily. Michael osullivan stays with us on the program. Countdown, too close to call. Australians had to the polls as Prime Minister turnbull pleads for continuity. We go to sydney next. This is bloomberg. Anna welcome back. This is countdown. Lets get the bloomberg first word news with rosalind chin. The bank of england has signaled a rate cut within months as