Transcripts For BLOOMBERG With All Due Respect 20160626 : vi

Now at about 8. 7 trillion. Mark after such a momentous day on friday for Global Investors post exit boat, lets look at some of the standout moves. Check out the go function. It tells you everything you need to know about all of the Asset Classes that moved. The lefthand column is equity s. Nchmark euro stocks, 50. A percent lower. Sterling, 8. 7 down. A record mov down. With the biggest fall in seven years. We saw yields move in peripheral markets by at least double points. The move was into the core markets. The credit risk moves and the commodity of the day on friday was gold, finishing by 4. 96 percent, the biggest oneday move since 2009. This is an interesting chart that shows you the differential in performance. Since daviddex cameron called the referendum on february 20. What was interesting was what happened at the end of may. We had this plunge as they said win remained was going to and then suddenly on friday, falling at least a. 7 . It was the ftse 250 whose constituents are more focused on ftse 250 down by half a. Ercent it is an International Index and of course benefits from a weaker pound. This is a wonderful chart. In the percentage of members with new 52 week lows, guess what, it stands at 35 which is 2011. Ghest going back to place. Ake election taken and want to show you how the Asset Classes. Interestingly, the yield on the spanish tenure is lower than it was on december the 20th. Lets check in on bloomberg first word today where taylor is. Taylor the brexit vote has led. O widespread turmoil Jeremy Corbyns senior team has resigned. Some Party Members have accused him of meeting a Week Campaign in the referendum. And, Scottish First minister said she wants to talk about european leaders about continuing the relationship with the eu. In 2014, scotts voted to stay in the union. A new poll Shows Majority in favor of independence. A new poll for donald trump has plunged. Trailinghas trump 5139. Roughly two out of three people surveyed say that trump is unqualified to be president. Mark the big question is what. S next so far, seven shadow partners have quit. John mcdonald talked to bloomberg about corbyns future. Weve had these resignations and there might be a few more. Those will be replaced. Onlyembers voted for him nine months ago with an overwhelming majority. He biggest support jeremy remains. Mark for the latest, Francine Lacqua joining us outside of westminster. Another day of turmoil. Francine you have quite a lot the main Political Parties are you were just mentioning the labour party. You have a small group of supporters here making their voice heard. They support jeremy corbyn, and that will not change. We have been speaking out to a what theyre telling us is even if there is a small revolt, it is very unlikely that if they asked for new leadership the people behind that will pull their support from jeremy corbyn. The way you vote for leadership is you just have to pay three pounds for membership and then you decide who the best person is to these your party. Of course, the more elite members saying he is a nice guy,. Ut not the leader meanwhile, where are we in lead by the conservative party . Francine we have a couple of names that i imagine well see days. N the coming process a lot of people putting pressure on the u. K. Saying, you winded out wanted out, you got out. If you think of it rationally, first of all, you dont have a Prime Minister that is really in charge anymore. David cameron steps down. It is a problem of legitimacy. Boris johnson who is crown overe says he should take because he did such a forceful exit campaign. None the wiser on who will leave the tory party who will start the new shares and even when the negotiations will be started or if article 50 will be triggered. The lead . O is taking who is speaking to the citizens of the United Kingdom and telling them what is going on . Francine this is the problem. Ofre seems to be a vacuum power. If you look to the right, you dont know whether Boris Johnson will take charge. You have some dubious characters and those who were nonexistent during the campaign. Who is the man really in charge when it comes to the market. Barton. Say mark we know that on tuesday he was. Eant to be in portugal if there is one person or one have timet seems to for brexit, i would say it is mark carney. Vonnie francine the quad telling us that the canadian central banker is in charge. Lets head to london where there is pressure to put on the leave. Have a listen. Week we start formally, if possible, for the request,ntroduce the or informally, but we need to start as soon as possible to avoid any possible crisis. Vonnie for more, i want to bring in caroline hyde. There are authorized asking for britain to not eat punished for this vote. It seems that is all the eu leaders want to do. Is anyone reaching a head out now . Caroline it is interesting. Angela merkel once calm when it comes to renegotiate with the United Kingdom. Whether or not they will be a tough stance, the debate is out. What we know is they want a quick start, they want speed. Speed. S a need for they want them to start executing quickly. You just heard from the vice chancellor of germany thing that actually David Cameron should resign sooner than the three months so they can start the legitimate process. You heard that from the foreign minister of belgium, whom i spoke to. He says they could speak informally to David Cameron about the process of the u. K. Extinct the eu even if he does not have formal the disney the jim missy at the moment. Very different tactics going on here. On the one hand, they want to buy time, three months, to put in a new leader. On the flipside, the eu is trying to push this forward as quickly as possible to avoid what i am told is a crisis. There is concern that we will get the dumb no effect across eu. Not only the u. K. Will demand a referendum, but france already is on the right wing, spain already is. They want to stop this in its tracks and tackle some issues having to do with refugees, phenomenal unemployment. They feel, to do this, they need the u. K. To leave and these quickly. Mark berlin remains in the political limelight tomorrow. Absolutelyou are right. We will have even more leaders fly in. We had steinmeyer of germany calling in belgium, but also, france was there. We got italy, the netherlands,. Nd indeed, luxembourg as well tomorrow, Angela Merkel was always meant to meet with Francois Hollande of france and she has expanded that out and says she now wants italy to come over and the leader of the european council. What is interesting, in the press come at time press, for example, they did that france german axis is not as strong as it could be. She needs more voices on the table before they go to brussels on tuesday to sit down with the rest of the 28 eu countries in the next few days, discussed the remaining ones to discuss how they fund as they go forward. To italy,kel speaking andce, the eu President Council of the president saying, if the u. K. Left, it would be the end of western political civilization as we know it. Angela merkel desperate to ensure that does not live up to the previous warnings. Vonnie thank you. Coming up on Bloomberg Markets economic winners and losers from last weeks historic brexit vote. Vonnie but im from london and new york, i am vonnie quinn in new york. Mark i am mark barton in london. This is a special edition of bloomberg arc its on Bloomberg Television. Vonnie it is time for the Bloomberg Business flash, a look at the biggest business stories outside of brexit. There is a report that google will release its own smartphone. There in talks with mobile operators about a cool branded phone. They are to make the Android System that runs on four out of every five smartphones. China is considering changing the rules of joint ventures with foreign automakers. This is according to the national autoe commission. A new study says that Companies Face more data tests from their own employees than they do outside. The study comes from accenture and hss research. More than two thirds of companies surveyed report attempts by insiders. Slightly more than half say they were targeted by outsiders. That is your Bloomberg Business flash for this hour. Dark . Mark . Mark lets get back to the thick story. Looking at the economic winners and losers from this vote. Give us an idea of the impact of brexit on the u. K. Economy. What are your models telling you about the impact on growth in 2016 and 2017 . Maxine hello. The u. K. Economy should suffer quite a bit from this decision. Obviously, there is a lot of uncertainty. On estimates, it could be 27 , all things being equal, maybe not just for the next couple of months but several years. For comparison for the rest of europe, it should be about 10 times smaller. Mark 10 times smaller. Is there anything that the bank of england could do to mitigate that decline in gdp . Maxime sure. I think in the next couple of days. It will be all about financial conditions in the u k and questions about the Banking Sector and whether we are in for some sort of credit crunch. I think the bank of england has a strong response to deliver. There has been a statement on friday and the Liquidity Provision by think there is more in the sideline for rate cuts in the next couple of weeks. Essentially, also some easing of financial measures. Vonnie you say in the next couple of weeks some Interest Rate cuts . That would be outside of typical meetings. actually, it all depends on how the markets react in the next couple of days. If we do have some shifting in the u. K. Market, we could have some intermittent decisions from the bank of england. I do not think it is ruled out. Maybe it will wait until the next actual meeting. You are bringing down your forecast for gdp growth and obviously the impact for europe. What channel would that be going . Hrough for the most part would be the confidence channel, the rate channel . Maxime i think it is a bit of abouthing, but really sentiment, the financial market. Just to be sure that it is not increasing concern from the political perspective, but also a weaker economy. Portugal,hink about italy. Also, the political response, to show the brexit is not the only step to the end of the eu. Mark brexit not the First Step Towards the end of the eu. Right, still ahead, spanish elections the next Prime Minister will have to deal with 20 of unemployment and the second biggest budget deficit. We will have the latest live from madrid. That is next. Vonnie live from new york, i am vonnie quinn. London, i mark barton. This is a very special edition of Bloomberg Markets. Elections also underway today as the country votes for the second time in six months. It is all happening this weekend. Were joined from madrid with more details. Be will not get results until about 4 30 eastern time, but can you give us some color, what is going on at the moment . Sure, we still have 2. 5 hours to go until voting closes here in the elections. Vote, runup to the opinion polls have pointed to a similar but slightly different outcome than the one we had last december, mainly with the Peoples Party and the acting minister winning the largest number of seats in the chamber of deputies. Of, still falling short enough seats, the majority, to be able to govern on his own. Who comes in second and third is really key. If the Antiestablishment Party that is most closely compared to yriza increase, the likely scenario is that you get a government led by their party. If the socialist come in second, you will get a Parliament Led by them. Mark the bond deals were lower went elections the elections were last held. Is it such a bad thing not having a government . Elliott up until friday, when the u. K. Made the decision to opened, andmarkets the decision to leave the union came out they were forecasted doing quite well. On the plymouth has come down to 20 . Still high, but going in the right direction. Certainly, we saw on friday the fragility of the recovery when the main stock like it here was battered, along with italy. An interesting take on all of thing notat the only priced into spanish markets right now is a leftwing government. Or, a third election. If either of those things happen, expect more follow till the. Placebig election taking in spain. More coverage ahead. You guys be good. Ill see you later [ bark ] [ bark ] bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. You guys be good[ bark ] ill [ bark ]later bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. Shot of westminster. It is term ill behind those doors. Tuned mark barton is outside the house is parliament in 90 minutes. It that something to forward to. Lets dig into sterling. Julie lets take a look at what happened on friday. The deep declines that we saw for sterling on friday of 8 , the worst oneday drop on record. You can look it hrh. Historicalat the distribution of any kind of asset or in what we have is typically a range of a 1 move or so. This looked at the distribution of movement over the past year. Way out here is the movement we had on friday. That is the rarity of the move of what we saw friday. Based in london said he sees no reason to buy the dip in sterling. Could we see more declines . Another way to look at it is the one day change versus a broad basket of major currencies. Versusthem traded higher the pound on friday. It wasnt just friday. If you look at the year to date, only the peso has fallen versus the british currency. That is the damage of the friday movement. Is it as bad as we saw during the financial crisis . Will we see this kind of volatility and these kinds of declines . This is looking at implied volatility. To 2008 to see how it compares. White line is the one leak volatility. The purple is the sixmonth. In terms of one week volatility, there was an enormous spike friday. Options traders think there will be shortterm continued volatility. There was also a big spike in the onemonth volatility. There are still a lot of things to shakeout. How will the u. K. Exit from the eu go . What are all of the Unanswered Questions about how theyre going to resolve it . Compare that with where we were the financial crisis, its lower. Comments, he his said this is not a Lehman Brothers moment in you dont have the consequences in the bank of england. They did say they would try to prepare for this. Seeill be fascinating to how the currency shakes out and how it compares to Lehman Brothers. Vonnie it will be an intense week. The decision to leave the European Union is a watershed of that. The exit. Chs outlined he talked about the meaning of brexit being a triple protest. I would like to thank from article to give you a sense of what he said. Were going to speak to him in a moment. That up again. Jeffrey, lets bring in the a skype. Thanks for joining us. Jeffrey thank you. Thate what is the action be taken . Jeffrey we have to understand ist what brings it reflects more than u. K. Phenomenon. All of europe and the United States is divided roughly in half and how they view globalization right now. Course isoint of migration. Refugees and immigrants, that was the decisive Tipping Point for brexit. It is what is fueling Donald Trumps campaign. It is the antiestablishment antiimmigrant politics to the European Union. Its not going away. It reflects several facts and real. There is surging immigration and people feel deeply unnerved by it. Part of it is the syrian refugees, which is the sharpest point provocation right now. I think we need a strategy that understands these underpinnings. The are exacerbated by growing inequalities in europe and the United States. Is at the center of this debate right now. Europe doesnt have an effect strategy. The United States doesnt. The public is quite unhappy about it. You have two police borders. That is absolutely clear. There are no limits to the wouldbe migrants that are coming. You have to do two more things. One is to stop the wars that are fueling the migrants. These are wars of choice. The war in syria is a war of choice to topple the regime that has been a disaster. Time, we must do much more to do Smart Development outside so the pressures for mass migration are not as intense as they are right now. Mark how likely is it . Stopping wars is much more difficult to how likely is it that your solution could be implemented . Jeffrey not so likely. Inertia is a real phenomenon in our society. The United States has been an it did to war in the middle east. Libya, iraq, syria. Poly policy establishment of the United States, we should not be toppling assad. This cold war with russia is a state. Russia and the Global Investors<\/a> post exit boat, lets look at some of the standout moves. Check out the go function. It tells you everything you need to know about all of the Asset Classes<\/a> that moved. The lefthand column is equity s. Nchmark euro stocks, 50. A percent lower. Sterling, 8. 7 down. A record mov down. With the biggest fall in seven years. We saw yields move in peripheral markets by at least double points. The move was into the core markets. The credit risk moves and the commodity of the day on friday was gold, finishing by 4. 96 percent, the biggest oneday move since 2009. This is an interesting chart that shows you the differential in performance. Since daviddex cameron called the referendum on february 20. What was interesting was what happened at the end of may. We had this plunge as they said win remained was going to and then suddenly on friday, falling at least a. 7 . It was the ftse 250 whose constituents are more focused on ftse 250 down by half a. Ercent it is an International Index<\/a> and of course benefits from a weaker pound. This is a wonderful chart. In the percentage of members with new 52 week lows, guess what, it stands at 35 which is 2011. Ghest going back to place. Ake election taken and want to show you how the Asset Classes<\/a>. Interestingly, the yield on the spanish tenure is lower than it was on december the 20th. Lets check in on bloomberg first word today where taylor is. Taylor the brexit vote has led. O widespread turmoil Jeremy Corbyns<\/a> senior team has resigned. Some Party Members<\/a> have accused him of meeting a Week Campaign<\/a> in the referendum. And, Scottish First<\/a> minister said she wants to talk about european leaders about continuing the relationship with the eu. In 2014, scotts voted to stay in the union. A new poll Shows Majority<\/a> in favor of independence. A new poll for donald trump has plunged. Trailinghas trump 5139. Roughly two out of three people surveyed say that trump is unqualified to be president. Mark the big question is what. S next so far, seven shadow partners have quit. John mcdonald talked to bloomberg about corbyns future. Weve had these resignations and there might be a few more. Those will be replaced. Onlyembers voted for him nine months ago with an overwhelming majority. He biggest support jeremy remains. Mark for the latest, Francine Lacqua<\/a> joining us outside of westminster. Another day of turmoil. Francine you have quite a lot the main Political Parties<\/a> are you were just mentioning the labour party. You have a small group of supporters here making their voice heard. They support jeremy corbyn, and that will not change. We have been speaking out to a what theyre telling us is even if there is a small revolt, it is very unlikely that if they asked for new leadership the people behind that will pull their support from jeremy corbyn. The way you vote for leadership is you just have to pay three pounds for membership and then you decide who the best person is to these your party. Of course, the more elite members saying he is a nice guy,. Ut not the leader meanwhile, where are we in lead by the conservative party . Francine we have a couple of names that i imagine well see days. N the coming process a lot of people putting pressure on the u. K. Saying, you winded out wanted out, you got out. If you think of it rationally, first of all, you dont have a Prime Minister<\/a> that is really in charge anymore. David cameron steps down. It is a problem of legitimacy. Boris johnson who is crown overe says he should take because he did such a forceful exit campaign. None the wiser on who will leave the tory party who will start the new shares and even when the negotiations will be started or if article 50 will be triggered. The lead . O is taking who is speaking to the citizens of the United Kingdom<\/a> and telling them what is going on . Francine this is the problem. Ofre seems to be a vacuum power. If you look to the right, you dont know whether Boris Johnson<\/a> will take charge. You have some dubious characters and those who were nonexistent during the campaign. Who is the man really in charge when it comes to the market. Barton. Say mark we know that on tuesday he was. Eant to be in portugal if there is one person or one have timet seems to for brexit, i would say it is mark carney. Vonnie francine the quad telling us that the canadian central banker is in charge. Lets head to london where there is pressure to put on the leave. Have a listen. Week we start formally, if possible, for the request,ntroduce the or informally, but we need to start as soon as possible to avoid any possible crisis. Vonnie for more, i want to bring in caroline hyde. There are authorized asking for britain to not eat punished for this vote. It seems that is all the eu leaders want to do. Is anyone reaching a head out now . Caroline it is interesting. Angela merkel once calm when it comes to renegotiate with the United Kingdom<\/a>. Whether or not they will be a tough stance, the debate is out. What we know is they want a quick start, they want speed. Speed. S a need for they want them to start executing quickly. You just heard from the vice chancellor of germany thing that actually David Cameron<\/a> should resign sooner than the three months so they can start the legitimate process. You heard that from the foreign minister of belgium, whom i spoke to. He says they could speak informally to David Cameron<\/a> about the process of the u. K. Extinct the eu even if he does not have formal the disney the jim missy at the moment. Very different tactics going on here. On the one hand, they want to buy time, three months, to put in a new leader. On the flipside, the eu is trying to push this forward as quickly as possible to avoid what i am told is a crisis. There is concern that we will get the dumb no effect across eu. Not only the u. K. Will demand a referendum, but france already is on the right wing, spain already is. They want to stop this in its tracks and tackle some issues having to do with refugees, phenomenal unemployment. They feel, to do this, they need the u. K. To leave and these quickly. Mark berlin remains in the political limelight tomorrow. Absolutelyou are right. We will have even more leaders fly in. We had steinmeyer of germany calling in belgium, but also, france was there. We got italy, the netherlands,. Nd indeed, luxembourg as well tomorrow, Angela Merkel<\/a> was always meant to meet with Francois Hollande<\/a> of france and she has expanded that out and says she now wants italy to come over and the leader of the european council. What is interesting, in the press come at time press, for example, they did that france german axis is not as strong as it could be. She needs more voices on the table before they go to brussels on tuesday to sit down with the rest of the 28 eu countries in the next few days, discussed the remaining ones to discuss how they fund as they go forward. To italy,kel speaking andce, the eu President Council<\/a> of the president saying, if the u. K. Left, it would be the end of western political civilization as we know it. Angela merkel desperate to ensure that does not live up to the previous warnings. Vonnie thank you. Coming up on Bloomberg Markets<\/a> economic winners and losers from last weeks historic brexit vote. Vonnie but im from london and new york, i am vonnie quinn in new york. Mark i am mark barton in london. This is a special edition of bloomberg arc its on Bloomberg Television<\/a>. Vonnie it is time for the Bloomberg Business<\/a> flash, a look at the biggest business stories outside of brexit. There is a report that google will release its own smartphone. There in talks with mobile operators about a cool branded phone. They are to make the Android System<\/a> that runs on four out of every five smartphones. China is considering changing the rules of joint ventures with foreign automakers. This is according to the national autoe commission. A new study says that Companies Face<\/a> more data tests from their own employees than they do outside. The study comes from accenture and hss research. More than two thirds of companies surveyed report attempts by insiders. Slightly more than half say they were targeted by outsiders. That is your Bloomberg Business<\/a> flash for this hour. Dark . Mark . Mark lets get back to the thick story. Looking at the economic winners and losers from this vote. Give us an idea of the impact of brexit on the u. K. Economy. What are your models telling you about the impact on growth in 2016 and 2017 . Maxine hello. The u. K. Economy should suffer quite a bit from this decision. Obviously, there is a lot of uncertainty. On estimates, it could be 27 , all things being equal, maybe not just for the next couple of months but several years. For comparison for the rest of europe, it should be about 10 times smaller. Mark 10 times smaller. Is there anything that the bank of england could do to mitigate that decline in gdp . Maxime sure. I think in the next couple of days. It will be all about financial conditions in the u k and questions about the Banking Sector<\/a> and whether we are in for some sort of credit crunch. I think the bank of england has a strong response to deliver. There has been a statement on friday and the Liquidity Provision<\/a> by think there is more in the sideline for rate cuts in the next couple of weeks. Essentially, also some easing of financial measures. Vonnie you say in the next couple of weeks some Interest Rate<\/a> cuts . That would be outside of typical meetings. actually, it all depends on how the markets react in the next couple of days. If we do have some shifting in the u. K. Market, we could have some intermittent decisions from the bank of england. I do not think it is ruled out. Maybe it will wait until the next actual meeting. You are bringing down your forecast for gdp growth and obviously the impact for europe. What channel would that be going . Hrough for the most part would be the confidence channel, the rate channel . Maxime i think it is a bit of abouthing, but really sentiment, the financial market. Just to be sure that it is not increasing concern from the political perspective, but also a weaker economy. Portugal,hink about italy. Also, the political response, to show the brexit is not the only step to the end of the eu. Mark brexit not the First Step Towards<\/a> the end of the eu. Right, still ahead, spanish elections the next Prime Minister<\/a> will have to deal with 20 of unemployment and the second biggest budget deficit. We will have the latest live from madrid. That is next. Vonnie live from new york, i am vonnie quinn. London, i mark barton. This is a very special edition of Bloomberg Markets<\/a>. Elections also underway today as the country votes for the second time in six months. It is all happening this weekend. Were joined from madrid with more details. Be will not get results until about 4 30 eastern time, but can you give us some color, what is going on at the moment . Sure, we still have 2. 5 hours to go until voting closes here in the elections. Vote, runup to the opinion polls have pointed to a similar but slightly different outcome than the one we had last december, mainly with the Peoples Party<\/a> and the acting minister winning the largest number of seats in the chamber of deputies. Of, still falling short enough seats, the majority, to be able to govern on his own. Who comes in second and third is really key. If the Antiestablishment Party<\/a> that is most closely compared to yriza increase, the likely scenario is that you get a government led by their party. If the socialist come in second, you will get a Parliament Led<\/a> by them. Mark the bond deals were lower went elections the elections were last held. Is it such a bad thing not having a government . Elliott up until friday, when the u. K. Made the decision to opened, andmarkets the decision to leave the union came out they were forecasted doing quite well. On the plymouth has come down to 20 . Still high, but going in the right direction. Certainly, we saw on friday the fragility of the recovery when the main stock like it here was battered, along with italy. An interesting take on all of thing notat the only priced into spanish markets right now is a leftwing government. Or, a third election. If either of those things happen, expect more follow till the. Placebig election taking in spain. More coverage ahead. You guys be good. Ill see you later [ bark ] [ bark ] bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. You guys be good[ bark ] ill [ bark ]later bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. Shot of westminster. It is term ill behind those doors. Tuned mark barton is outside the house is parliament in 90 minutes. It that something to forward to. Lets dig into sterling. Julie lets take a look at what happened on friday. The deep declines that we saw for sterling on friday of 8 , the worst oneday drop on record. You can look it hrh. Historicalat the distribution of any kind of asset or in what we have is typically a range of a 1 move or so. This looked at the distribution of movement over the past year. Way out here is the movement we had on friday. That is the rarity of the move of what we saw friday. Based in london said he sees no reason to buy the dip in sterling. Could we see more declines . Another way to look at it is the one day change versus a broad basket of major currencies. Versusthem traded higher the pound on friday. It wasnt just friday. If you look at the year to date, only the peso has fallen versus the british currency. That is the damage of the friday movement. Is it as bad as we saw during the financial crisis . Will we see this kind of volatility and these kinds of declines . This is looking at implied volatility. To 2008 to see how it compares. White line is the one leak volatility. The purple is the sixmonth. In terms of one week volatility, there was an enormous spike friday. Options traders think there will be shortterm continued volatility. There was also a big spike in the onemonth volatility. There are still a lot of things to shakeout. How will the u. K. Exit from the eu go . What are all of the Unanswered Questions<\/a> about how theyre going to resolve it . Compare that with where we were the financial crisis, its lower. Comments, he his said this is not a Lehman Brothers<\/a> moment in you dont have the consequences in the bank of england. They did say they would try to prepare for this. Seeill be fascinating to how the currency shakes out and how it compares to Lehman Brothers<\/a>. Vonnie it will be an intense week. The decision to leave the European Union<\/a> is a watershed of that. The exit. Chs outlined he talked about the meaning of brexit being a triple protest. I would like to thank from article to give you a sense of what he said. Were going to speak to him in a moment. That up again. Jeffrey, lets bring in the a skype. Thanks for joining us. Jeffrey thank you. Thate what is the action be taken . Jeffrey we have to understand ist what brings it reflects more than u. K. Phenomenon. All of europe and the United States<\/a> is divided roughly in half and how they view globalization right now. Course isoint of migration. Refugees and immigrants, that was the decisive Tipping Point<\/a> for brexit. It is what is fueling Donald Trumps<\/a> campaign. It is the antiestablishment antiimmigrant politics to the European Union<\/a>. Its not going away. It reflects several facts and real. There is surging immigration and people feel deeply unnerved by it. Part of it is the syrian refugees, which is the sharpest point provocation right now. I think we need a strategy that understands these underpinnings. The are exacerbated by growing inequalities in europe and the United States<\/a>. Is at the center of this debate right now. Europe doesnt have an effect strategy. The United States<\/a> doesnt. The public is quite unhappy about it. You have two police borders. That is absolutely clear. There are no limits to the wouldbe migrants that are coming. You have to do two more things. One is to stop the wars that are fueling the migrants. These are wars of choice. The war in syria is a war of choice to topple the regime that has been a disaster. Time, we must do much more to do Smart Development<\/a> outside so the pressures for mass migration are not as intense as they are right now. Mark how likely is it . Stopping wars is much more difficult to how likely is it that your solution could be implemented . Jeffrey not so likely. Inertia is a real phenomenon in our society. The United States<\/a> has been an it did to war in the middle east. Libya, iraq, syria. Poly policy establishment of the United States<\/a>, we should not be toppling assad. This cold war with russia is a state. Russia and the United States<\/a> have a common interest in stopping isis. We should not be opposing each other. Think there should be invitations to ukraine and georgia to become numbers of nato. Wet is another tripwire that went into this spiral. All of this is profoundly unnerving for the public. When it fuels billions of migrants, you wind up with the kind of politics we have right now. Trump, peoples parties all through europe that are antimigrant and highly populist and there is a region reason for this. What manyjust to say of the Mainstream Media<\/a> says. There are underlying provocations that should be solved, not just pushed aside. Aside whatg to push this politics really represents. Mark thank you for taking some time out and talking to us. Today from donna. News, taylorn the riggs has the latest. Taylor the business secretary has called for a summit of his this leaders to discuss concerns over leaving the European Union<\/a>. People have to create more business friendly environments to. The uks Credit Rating<\/a> may be downgraded. The dow look is down from stable to negative. That is a step toward cutting. Moody says they expect uncertainty and lower spending to lead to weaker growth. An iraqi commander says the city of falluja has been fully liberated from Islamic State<\/a> forces. They have controlled falluja for almost two years. They launched an assault last month. The city is 40 miles from baghdad. Francis has raised tensions with turkey. They have denounced the popes declaration that the 1950 slaughter of armenians was a turkey in the side or in and israel are ending their estrangement today. An israeli official says benjamin that yahoo will make the announcement. It will clear the way for them to ship natural gas to turkey. Global news 24 hours a day powered by 120 countries. I am taylor rates. This is bloomberg. Mark thanks a lot. Voteg up, how the brexit may affect the Federal Reserve<\/a> rate hike timeline. A programming note for tomorrow, we will bring you an exclusive interview with Madeleine Albright<\/a> tomorrow at 10 30 a. M. In new york. Vonnie live from new york and london, i am vonnie quinn. It mark this is a special edition of embark targets. For thes the brexit Federal Reserve<\/a> . Our next guest says the decision to leave the ee will delay the fed from hiking. Joining us on the phone is kathy jones. Thank you for joining us. Kathy my pleasure. Mark i am looking at our work function. Im sure you have seen it. It looks at the odds of a said rate hike this year. July, 0 . September, 0 . Surely the fed is not more likely to cut . Kathy well take a it cut is very likely. That will probably be one of the last choice is that they make. Some sort of easing was going to be. They might choose quantitative easing over a rate cut. They have so little room to maneuver around rates unless they want to go negative. The more likely scenario is there is a hold for the indefinite future. We may not in the rate hike at all. It wont be for december. Mark what does it mean for the 10 year yield . How long before we break that record . Its under 20 basis points. Kathy there is a good chance we see that broken relatively soon. It looks like the summer months are going to be ready volatile. The safe haven bid in treasuries will. It would not surprise me if that low is taken out over the next couple of months. Interestingly, if you go back to the 30 year bond, you have to go back to the 50s to find long yields thatsury low. Vonnie what does it mean if we get a rating by one of the major agencies . Kathy its not good news for them. I dont think that would change the trajectory of rates in the u k. Athink this is more likely rally because we are expecting some negative impact of the economy there. Its not good news for them. Its something they would have to address. I dont think youll impact the market very much. Vonnie is there money to be made in sovereign debt at the moment . Kathy the opportunity set is very limited. Its not that we are looking for rates to rise anytime soon. They will probably fall. With yields the slow, it gets difficult to find opportunities. Assuming the currency risk, yields dont make much sense. Will probably see money flow in and a playafe haven on the currency as well. Mark what is that lead peripheral bond yields in the eurozone . We saw the spanish and german 10 year on friday reach the widest sense 2014. There is a spanish election today. Divergentwitnessing a between the core of the periphery . Kathy i think that is going to be the case for the time being. There is so much political uncertainty. That is going to lead to lighter spreads. We can see some increasing spreads. I dont think we are back to the kind of spreads we saw a couple of years ago. When there was a question of redomination. I do think there is room for those spreads to widen. Mark thanks for joining us on this sunday. Thanks for joining. Governmentk. Brexit would the have a Significant Impact<\/a> on uks position on the world. This is what he thinks will happen next. Complete horror that this is happened. Britain is so prized. We make such a difference to the European Union<\/a>. The loss of our membership will come as a huge disappointment and set tech. Goodwilltended so much to britain, giving us a special overs, they have bent backwards during the Prime Minister<\/a>s renegotiation to make it easier for us to stay. You have taken your choice. The caravan has got to move on. We have got to sort this out. Weve got to deal with this for the sake of the European Union<\/a> and everyone who lives in europe. We want this to be focused on. We talking about it today here in london. Mark he was speaking to Bloomberg Television<\/a>. Were going to talk about what brexit means to Foreign Exchange<\/a> strategy. Richard jones is up next. Vonnie live from london and new york, i am vonnie quinn. Mark this is a special edition of Bloomberg Markets<\/a> on Bloomberg Television<\/a> and bloomberg radio. We are hearing up for a massive week. Starts its threeday fourmonth central banking in portugal. Vonnie tuesday we look at some economic data. The Federal Reserve<\/a> will be watching that area closely. Mark the g20 ministers meet in beijing. This is leading up to the summit held in september. The fed will announce the second part of its annual bank stress test. U. K. Home prices. Vonnie we might get a Little Information<\/a> into the future of yahoo . The Shareholder Meeting<\/a> will take place. We havent to date trip to greece. Well be talking to government leaders on the greek economy. Mark its all about brexit. Itrto rico faces default on to billion dollars in bond payments. That is on friday. What a week we are to have here on Bloomberg Television<\/a>. I want to bring in richard jones. How could this affect the Central Banks<\/a> . We were talking to kathy jones about the impact on the fed it. How far out has this pushed rate hike expectations . Richard if you look at our favorite function on the terminal, it does look like towards the end of the year the odds of a hike and a cut are about the same. I agree with kathy. I dont think they are going to cut rates. It has taken them out of the game this year and well into next year for the next rate hike. The boe,m the fed to we have had one guest on already from paris to said we could get an intramove from the boe before july 14. Richard i think it depends on how volatile price action is across the Asset Classes<\/a> this week. I think the writing is on the wall. The definite looks like the market expecting a rate hike. When you look at what longerterm guilds have done, we could get more from the bank of england. This under the 100 mark and getting stronger friday. Its not to know whats going to happen asked week and the you look at bank of japan intermission intervention . I would not be surprised if we had another look at the lows we saw friday on dollar yen. I think the difficulty for the mof and the japanese officials intervention by them is a difficult thing to have any affect. Brexit debate the caught everybody off guard. The result we had was a real surprise. I think its going to take a while for the dust to settle. The mof might be standing in front of a Freight Train<\/a> they dont want to get in the way of. Mark they were ready and they did intervene. On friday. Frankas a high for the against the euro. Vonnie that was considerably higher than the worst levels throughout the day. Richard we could this those again next week. Mark richard jones, thanks for joining us today on the special show. Michael mckee will sit down with alan greenspan. Welcome to bloombergs coverage. I am jonathan ferro. In his 5 00 on late sunday you afternoon. Jonathan we are taking you from new york to london to brussels. Turmoil rubbed it in u. K. Politics after the vote to leave the eu. Eight cabinet members have resigned as revolt against jeremy corbyn. To brusselsd live to figure out what is next. What Company Countries<\/a> will stand to benefit . We look at which Asset Classes<\/a> are poised for the biggest swings monday morning. 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