Bit of a reversal as they try to figure out what comes next. A lot of people saying this is not a floor but a temporary reprieve. Was talking to david westin earlier about the idea of Financial Markets with a bounce today but i do not know if the political markets have a bounce. You see the Jeremy Corbyn conference. By no means do i feel and all clear. Francine when you speak to traders and market participants, it is very clear that they believe Central Banks will once again step in and that is why we are seeing a little bit of a bounce. Tom can i say quickly how cool it is to have Alan Greenspan one day and mervyn king the next . We are honored. Francine but get to the bloomberg first word news. British Prime MinisterDavid Cameron meets with his fellow European Union leaders today for the First Time Since last weeks vote to leave the eu. He will be pressed on how he expects the u. S. To trigger article 50. Ruled himself has out of the race to succeed cameron as Prime Minister. He was the one Time Favorite for the job but he writes he has become too divisive after last weeks brexit vote. He campaign for a remain vote. Tag will be price higher than expected. A settlement will be filed today in a court in san francisco. Vw will agree to pay more than 15 billion, 5 billion more than previously reported. Drivers will get up to 10,000 per car for their troubles. Turkeys president is on a diplomatic Charm Offensive, ending their 60 year estrangement with israel and moved to improve relations with russia, apologizing for their shooting down of a russian warplane. A Supreme Court ruling is expected to improve Abortion Access across the u. S. It struck down a texas law that forced many abortion providers to shut down in the name of health. It is likely to do similar restrictions in other states. Global news 24 hours a day powered by more than 2600 journalists and analysts and more than 100 countries. Tom lets get to the data right now. Finally a bid, that is the headlines with futures up 195. The euro a little bit of a bid and that shows some of the nuance. The yen does not move. There are some real dynamics in the spread market. The vix comes in 2141. What a wacko fix yesterday. Stronger, 1. 3307. There is the dynamics of the yield curve. Francine, what do you see . Francine i am seeing pretty much the same things. European stocks rebounding as investors are speculating from our policy help. You, this isw probably not the stocks europe 600 today. I do not believe they are down 20 but overall this is the fix index. Vix index. There is something wrong with my board. Do not freak out. Tom can we blame that on marissa the intern . Probably an intern screwed up the data check, right . Francine it was just a oneyear data check. Tom our interns are only with us for like four days. Lets go to the bloomberg. When in doubt, beat up on the summer interns. The difference in the twoyear and 10 year yield, some of the gloom crew says this is a recession. What i would suggest is yesterday was quite odd, a flatter yield curve because the flight to quality with essentially the twoyear pegged and the 10 year at a lower 10 year yield. It is a twisted yield curve. Francine i picked out something a little bit twisted as well. Showing up tois meet his old allies in brussels. His is overall market cap the u. K. In white, the japan japan in blue. Chart, thesey this are various events. Cameron comes into power, we go into negative rates, and no u. K. Market cap is 15 smaller than the frenchgerman combo. Tom Francine Lacqua with the ipses, the ovals. Francine Andrew Wilson now joins us. Ea. S in charge of p. M. We talked a lot about the prospect of special banks Central Banks and brexit. Do you think the markets will get uglier . Andrew we have had a pretty severe Market Reaction and today is an example, markets have gone down a lot and things may be that bad. The level of uncertainty is incredible. We have had a repricing across sterling, equity markets, and other markets not just in the globe, youross the were talking about the twoyear and 10 year in the u. S. Saidrobability of the moving in the near term has been diminished. This is not just a european event, this seems to be a bit of a global event, generally keeping rates lower for longer. Francine that means more negative rates . Te saw the 10 year u. K. Gil yield below 1 . How far can they go . Andrew i think it depends entirely on what happens to the u. K. Economy. Is likelyow the u. K. To go into a recession or certainly a material slowdown from the uncertainty. I think ceos everywhere will be waiting to see what the rules are they will be acting on. If you look at the consumer, there is no doubt this fall in sterling will result in upper push back on inflation. It has wealth affects. All of that is going to depress consumer activity and depressed the economic activity. The fall in the pound offsets a little bit. Is going to be softerto result in a u. K. Economy and likely the bank has to raise rates. Lower rates. Tom andrew, we have mervyn king coming up within this hour. There are some scheduling issues and we hope to bring him this hour. He says it is the young of today who will suffer from the next crisis. I believe we are at the next crisis. What does the city of london, what does global wall street need to do to reattach its faith . Your Goldman Sachs is one of the great pinyon us for the American Public and i would suggest for the european public. How are you guys going to reattach yourself to the use of the United Kingdom and europe . Andrew we would like to think we are pretty attached. We have a lot of summer interns and i was addressing our new interns just half an hour ago so we still have a lot of people coming into Goldman Sachs. There is still a lot of interest coming into the city and the Financial Sector. Our work forcef european nationals, about 30 . That reflecting some of the greatest concern, what does this mean for my future in the u. K. . Those are the issues we are trying to work for now and that is going to take time. It is a high level of uncertainty. Tom help me with the decision tree. I want to clarify that mr. Wilson is in asset management, not trading or Investment Banking. Are you going to move bodies out of london . Andrew it is too early to answer that question. We have not even triggered article 50 yet. Once we know what the rules are we can make some decisions and i think it is almost irresponsible now to make decisions without those rules. Is, we simply do not know and until we know the answer we are not going to make decisions. , thanke Andrew Wilson you so much. Surveillance, we speak with mervyn king coming up. We look at the markets and the pound, strengthening for the first time in two trading days. Francine welcome back. We continue our brexit special but markets today, a little bit of relief. They certainly seemed to be looking a lot at what Central Banks can do. Lets get to the Bloomberg Business flash. Nejra the biggest manufacturer in the u. K. Says the brexit vote will have no immediate impact. Rollsroyce is sticking to its saycast this year and they underlying profit will be close to break even in the first half but business will pick up in the second six months. A stake in the young brand in disagree with their proposed 10 billion valuation. Llama operates kfc and pizza hut in china. Airbnb is suing its hometown, filing a suit against san claiming the rental restrictions violate protections of Internet Companies and its speech rights. That is the Bloomberg Business flash. Tom thank you so much. She has given us sterling coverage. Get it, francine . Coverage from outside westminster, just superb. Anna edwards has migrated toward the tower of london. Insight onnk your what london is going to do is really important. Are we going to see a london exit from whatever remains of the United Kingdom . Anna it sounds like a ludicrous question and it is and is not. Standing at city hall, the home of the mayor of london in this big city. He has been giving a speech today talking about taking back control. He is trying to reposition. The mayor of london was fighting in the corner of remain and he wants to get more control of decisionmaking for london. He is using the results of this brexit referendum to push that her member that 60 of londoners voted to remain ers voted tondon remain. He is not talking about full on independence or london cutting its ties from the rest of the United Kingdom. A second referendum may be on the terms . He has a Labour Party Politician as well so he saw what was happening at the top of the labour party. Francine what people that live in london is wanting want to know is whether this can be overturned and it will probably be unlikely. What do we know about financial passporting . It is probably up in the air. Right of the the british Financial Sector to sell its products around the eu. In the wake of the vote there is very little known because we do not know what kind of trade arrangements will be made and this divorce negotiation that is itng to start at some point, has not even really started in earnest, as your last guest was saying it is difficult for banks to plan where to put staff if they do not know what space in london the banks will have compared to the rest of the European Union. Francine it is not conceivable on conceivable they would have to play by the eu rules. Wilson, ceo of Goldman Sachs is still with us. Sense trying to get a from the Financial Committee is whether they want an article 50 triggered right away or whether you just want to wait a little bit and see how things pan out in the hope that the outcome would be better. Andrew i think the longer it takes the more certainty. I think time probably is helpful in this decision because we do not want rash decisions. The morer it takes favorable it is i think. Clearly isassporting critical to the city of london which has been a financial capital. There is no reason to believe it will cease, it is just the nature of what functions can be performed here that remains incredibly uncertain. Tom lets do a financial question. Bonds are priced to perfection. For faith and credit bonds are priced to perfection. What do you do for duration and what do you do if you have to sell them . Is cash king . Andrew i think the question is around economics. If the economy turns down enough , i would still say they are a safe haven asset that people go to and we have seen that in the last three trading days. Yields have come down significantly and that tells us are still seen as the safe haven asset. As the economic picture becomes clear through the next 18 months to two years, we will get a better sense on should you be moving into riskier assets. From a dollar perspective, u. K. Banks look very cheap. The question is, do they get cheaper . I think these environments create opportunities for investors. In the short term i think the bond market is going to stay relatively big. Oris going to be 12 months so before we start to get a clear picture on the trajectory of u. K. Growth. Francine Andrew Wilson stays with us, ceo of Goldman Sachs and be a. We also speak with the mayor of london, sadiq khan, and possible annexation. What are his views on brexit . Francine welcome back to bloomberg surveillance. Francine lacqua in london, tom keene in new york. It is time for my morning mustread in a picked out something by mohamed elerian. By imagining the eu in three years and heres what he is imagining. They have regained their financial footing as well as its national confidence. A smaller and more unified European Union now functions in a more coherent fashion. Ith us is Andrew Wilson hunted elerian basically says that however this would be the best possible outcome, not that likely and they would have lost so much influence in the global world. On a grade of one to 10, how much do you worry about the future of the u. K. . You are more on the optimistic side, that can things turned ugly if article 50 is triggered at the wrong time . I think it is the whole negotiations and this is what is unsettling markets, the uncertainty around that. Exactly what role is the u. K. Going to play in europe . It is still the biggest trading partner by a long ways to that will not change overnight. There is going to be so much focus around the access the u. K. Gets. General, europe is pretty good at negotiating things so i would not rule out the possibility of the u. K. Staying on the fringe of europe but the terms and conditions of that and what that environment looks like , it will be very important. Financial passporting, that will be very important. I think the point he makes about , thee becoming more united leaders in europe will realize this is a real threat to the eu and that they need to change policies. You could argue the old austerity push might need to be phased back a little bit because it is a clear vote against the establishment, against that austerity measure. Tom i believe there is a now oneway bet on weak sterling. All of my radar is up. As portfolio managers, du hedge currency . Do you get under the table . Andrew given how far it has fallen, i think you are starting to make a case that sterling is becoming more of a two way that 1. 30, there is always a risk. Markets have a tendency to overshoot but somewhere around these levels, i think it is a oneway bet. Tom Andrew Wilson with Goldman Sachs. Coming up, willis sparks of Eurasia Group. Tom good morning, everyone. Bloomberg surveillance. Francine lacqua in london, tom keene in new york. Investment on the International Relations of a disUnited Kingdom, we continue our coverage on what is a political day with market doing better. Jeremy corbyn front and center. Ecb president mario draghi is calling for a Global Policy alignment to lift economic growth. He spoke at the annual forum in portugal. Monetary policy has inevitably created destabilizing spillovers as well, especially when Business Cycles have been less aligned. The Large Exchange rate fluctuations into a major currencies and the pressures some emerging economies have experienced from capital flows are testament to that. This is not so much a result of the measures Central Banks have employed but rather of the intensity with which they have had to be used. He did not mention the u. K. Decision to leave the u. K. Leader labour party Jeremy Corbyn faces a noconfidence vote today. Massrexit vote prompted a exit this from his campaign. The implication is that he does not have what it takes to win a general election which could happen sooner than expected. Auth korea is in planning 17 billion fiscal stimulation package. The south korean Government Cut its growth forecast for this 2. 1 2. 8 . To the pentagon is looking to ramp syriansining for battling the islamic state. Last year the Training Plan was abandoned. The Washington Post says the u. S. Is training specialized fighters rather than ordinary ground troops. Global news 24 hours a day powered i more than 2600 journalists and analysts in more than 150 countries. Francine we spoke earlier onto willie walsh. Ryan chilcote spoke to him. 2016had to lower their profit targets and talked about currencies. The impact of the vote to leave the eu principally affected currency so we have seen the collapse of the pound against the euro and the dollar. In europe and what we have is a translation impact so our British Airways translation is translated at a completely different Exchange Rate. We are down in our profitability. We also have the impact of a weaker pound against the dollar and as you know, the dollar is the currency for feel and aircraft related so now we have higher expenses as a result of the weaker pound. There are two significant impacts on our profitability. You break that down starting with the weakness in the pound and how that affects your cost, explain that to me . Wholeyou look at iag as a we are short about 2 billion so we have 2 billion more dollar costs then revenues. That is driven largely by the price of oil. We are saying the price increase in recent weeks and months so our fuel bill is going to be higher but it is also going to be higher because the pound and the euro have both weakened against the u. S. Dollar. That no doubt will have an impact. Poundif we have seen the move from 1. 46 to 1. 33, is that the hit you expect to take . It is unknown where the pound will stabilize against the dollar but clearly on friday we believed it was going to take a significant hit. The pound closed stronger on friday than we expected but weakened again yesterday. Going view, the pound is to be structurally weaker against the euro and the dollar and that clearly has an impact on our business. Ryan and it has an impact on consumers and what they do so you have talked about weakening and demand. How do you see the demand picture