It hit its highest level since the election here in the u. S. It is calm. The dollaryen pretty much goes nowhere. The vix is down by over 1 . Gold, which you would think is a real safe haven bid, is going nowhere. Jonathan and just a moment, the Prime Minister of the u. K. Will be heading over to Buckingham Palace to meet with Queen Elizabeth ii. This is largely seen as a formality. Its historical theater. She does need to form a government. She will have to reach out and she has done that with the ireland Unionist Party to form a government. That will happen. It she has to do this is the headline. The u. K. Has a Hung Parliament after yesterdays election. That is not the outcome she was hoping for. What the people of the United Kingdom voted for last year was for the u. K. To leave the European Union. We have started that process in motion. There is no turning back. Now is the time for a general election because it will strengthen our hand. The britain i love is under threat. The Prime Minister called the election because she wanted a mandate. Is lostate shes got conservative seats and lost support and lost confidence. Ais is this asked her disaster. Calling referendums in general elections to suit your party rather than sitting the country is something to be avoided. Politics has changed and politics is not going back into the box. Is anna joining me edwards and matt miller. Lets begin with you. The nuts and bolts of the last 12 hours and how it shapes things going through the weekend. Anna absolutely. Its good to see you. Its a failed strategy from theresa may. Electionthe lack that never needed to happen. It was to strengthen her hand and she failed to do so. Have 318 with only one seat left account. She has failed in that sense. Will she remain in the lead . When we look at the timetable that lies ahead, she goes to the queen to seek permission. As you said, that is a formality. How stable will it be . Seats, there the is some casual cooperation going on. How stable is that going to be when you need 320 62 habit majority. Then go to the 13th of june and the 19th of june. This assumes she makes it this long that she does not face a leadership challenge. There will be leadership challenge is waiting in the wings. Lets look at the Trading Floor. Lets bring in matt miller. When the headline drops on turned to somee of the Market Participants and asked them if you get a Hung Parliament, where does it go . It dropped toward at 120. It hasnt happened in the way that many people thought it would. Why not . I watch that coverage last night. That confirms a lot of the views of traders i spoke to in the week running up to this vote. They thought 120 or the low one 20s is where we would go. They thought that would be a worse case scenario, even worse than if labor actually had won the majority. We did not see the pound dropping last night. It had barely traded in fact. The cable is where people were putting their money or selling the pound. They werent really selling it reagan size. P. M. Local to 6 45 time. To 126. 93. Ped a quick recovery above 127, a lot of people said this raises the chance of a soft brexit and that would eventually be good for the pound because youve still got a lot of flow between europe and Great Britain, a be open borders with ireland and great written if theresa may made this cooperation pact. We have not seen a lot of movement. There was a lot of volume pick up at 8 00 this morning. Its been waitandsee until we get a statement from theresa may. Quickly, and the negotiations, the market has been gripped by the story. You either get a soft one or hard when. The debate exist. The negotiation take place from here . How do you decide if its going to be a soft one or a hard one from here . Anna its interesting to think that we have a government that looks unstable with a very slim majority that includes a cooperation deal with another party. Does the power lie without faction of hard brexit supporters . Thatit lie with the 10 mps represent the Unionist Party in Northern Ireland . They believe in the union in United Kingdom. Crucially, they have a lot of access to the Single Market because of the flow of is this an industry across Northern Ireland into the republic. That is going to be crucial, where the power lies. Could taxation be thrown into the mix . They want to compete with ireland on taxes. Jonathan great work. You are outside westminster. Matt miller is on the trading four. Thank you very much. We want to bring in steve. We want to get to the following quote. Its the of session of the market through the morning and today. Act, inling balancing the aftermath of the election, the pound finds itself performing a balancing act between the pessimism of the money outcome in the optimism of a softer brexit. Its uneasy equilibrium. Steve not really. We are fairly negative on sterling from here. Let me run you through the justification. Significant drop in the pound. At one point, we were down 2 . That is a big move. You are knowing never going to get a move in one day. Vote, weened with the had a significant move in one day but then it continued to slide forward. I would judge the sterling mood based on what happening today. Second of all, positioning. We have a positioning indicator that gives us an insight into how investors were positioned with the pound going into the election. Our view was it was flat. Thats a big change in the very large short exposure many investors have been holding sense the brexit vote. Ift that tells us here is clients want to sell the pound, there is a lot of potential to put those short positions on. It sterling could move lower Going Forward. Jonathan the base case coming in today, the most toxic out, wouldve been for many people a Hung Parliament. We woke up with a Hung Parliament and theresa may trying to put together a majority with the mps in Northern Ireland. The base case for many people, if we get that out, it was down toward 120. Why hasnt that happen . Steve i think we will get there. Many clients wont react instantaneously. Strategistsf fx will be doing is focusing on fast money. There is a lot of longterm investors, real money investors. There are Global Investors who are not going to make decisions on the first morning. They will waitandsee and see what happens. Jonathan they put out the following quote, the soft brexit story. He said its a red herring. A soft rights it involves negotiating something remaining in the Single Market. That includes the Free Movement of people which is on on probable. Is that a red herring . Steve i think its overoptimistic. The u. K. Alone is not going to determine the brexit deal. This is something has to be negotiated with europe. The european view is pretty clear on this. The key point i would make is look what happened when theresa may announced the selection was coming. Sterling rallied and it rallied strongly. The reason it rallied was because Market Expectations were for her to increase her majority. She would be able to make tough decisions and negotiate hard. What this has done is reduced her ability to do that. I think it is unlikely that leads to easy negotiations. Its going to be more difficult. I think that uncertainty is what is going to weigh on us. Jonathan i want to bring in michael from new york. Its great to have you with us. Negotiations,he we have the decision and its a Global Market story. Negotiations have not started and it looks like a very localized market story. Is that what you see . Do you see worrying signs this could lead through to europe . There could be messy negotiations for both sides . Michael in terms of specific trades, it is relegated to the pound and the ftse. There are some broader things i think we have to be aware of. See they interesting to United States and the u. K. , a year ago we had this explosion of populism that resulted in brexit. Arguably, this post populist era got thee election mollusk last night. Question, whether the forces that were underlying populism are being transmuted into the far left are in left. We saw this with Jeremy Corbyns strong showing. You sought in the French Election or it election. It remains to be seen was going to happen over here in the u. S. Clearly, that is one course that if there is a rise of the far a risk thatould be is going to be underpriced by the market. Its a longerterm issue as it relates to the u. S. Onis something to be focused in the coming months. How bad could it get . Looking at it from over here, this was already a difficult negotiation with 27 Different Countries and hundreds of agreements. Now they dont know what their bargaining position is. Its not clear who is doing the bargaining. At some point you can go back to wto rules are in how disastrous could that be . Michael i think this is the point. We would say that the u. K. Really needs to offer a clear stance. If she stays on his Prime Minister, she could be pulled left or right. She is very vulnerable. Is thent we would make u. K. Is a country that runs a very large account balance. It needs to attract funding from foreigners to fund the deficit. If it doesnt, sterling comes under pressure. Thats why we have the deal at the moment, giving our intelligence tells us the market has unwound at a lot of the short exposure is quite a risk. That makes sterling very vulnerable. Jonathan we want to bring in another guest here in london. I am sure he is been up all night and the market is trying to get a grip of how the negotiations are going to take place. Ate we got any idea or sense what is happening inside the conservative party right now . Im sure there are lots of phone calls and secret meetings going on about where the party goes. What she is trying to do, she is trying to try her best to play this terrible hand. She is trying to look like she has a sense of urgency. She is running to the palace to get this government together. The key thing to look out for whether any senior conservatives or heavyweights will come out and say i will not serve in her government or its time for her to go. It would be very difficult for her to get through it. She is really living in a minute by minute races. Jonathan it sounds brutal to talk about the Prime Minister this way. She made this election about her leadership. John its a complete catastrophe. Its hard to think of a better bigger disaster. The last conservative to do this was david cameron. They are making a habit of this. Jonathan this is the second worst clinical decision of all time. Does the other side of the table look at the moment . How does europe look at the situation . John they really are struggling to maintain this sense. Meet. Re ready to them, the epp has said there is going to be no delay. There will be no delay of article 50. They have set a timetable on this. This was the nightmare situations it britain had the risk of falling into. Processt control of the and compound the situation by calling the election. There is no leadership. Its hard to think for the United Kingdom of a worse position to be in at the moment are in. Alix we are getting some new headlines. Chaos on anlled it industrial scale and they will carefully consider the best way forward. Are we going to see another Scottish Referendum . That was the question a few months ago. Is that off the table . She is doing what she does well, which is sounding defiant and strong the morning after an election. This was not good. Was a possibility of Jeremy Corbyn having them numbers to put a majority together, that wouldve swung the dynamic in her favor. Looking at the results, it would take a brave leader to relinquish hard for the record referendum at this point. Looking at the numbers last night, she cant really say that with any certainty. Yes, she is going to hear a lot of strong rhetoric. Im sure her advisers will tell her to be careful about pushing hard for a second referendum. Jonathan they did not get it this morning. You have a Hung Parliament. We should discuss this, what are the odds that labor can form a government . What needs to take place over the next several days for Jeremy Corbyn to form a government . You would need to see constitutionally you would need to see proof that the conservatives could not put a government together. If you look at the numbers and what we see, the dup are ready to support them. Its extremely unlikely that they they are not going to say that. Is it going to be under theresa may or someone else . It does feel like they can make a run. Theoretically, Jeremy Corbyn could form a government. Its highly unlikely. Jonathan he just ended his term as the chairman last month. Mark, its great to have you with us. This is the Financial Center of the country. One of the banker stinking right now about the mess that is unfolding . Mark they are getting on with the job. Ande got more uncertainty thats not good for financial markets. Its not good for investment decisions. We live in a very uncertain world. We have had a number of elections in other countries that have not gone the way people were predicting. We have the opposite in some places. France is looking much more stable. Was going tor happen over the next couple of days. I would expect conservatives will form a government. That is going to be uncertainty because of the small majority. Jonathan how difficult is it to go to europe and get the concessions theresa may needs to protect london. How difficult is that . Has the conversation changed . Negotiations were going to be difficult. Its not about protecting the city. We are looking for something that has a good outcome for markets in britain and europe. We are going to have a time of uncertainty. Negotiations might be delayed for that. Jonathan theresa may is heading over to meet with Queen Elizabeth ii at rockingham palace. She is seeking permission to form a government. Its just a formality, but significant. She is going to need someone else to come on board. I dont know anyone that expected that a month ago. It was a one issue election. It was about brings it. Have we got any idea what it was actually about and what her mandate is now . Mark she turned it into a referendum on her personal authority and the british people delivered a clear verdict. That sort of came about because of the uturn she did on the tax. She appeared to try to politicize the terror attacks in london and manchester. When you look at Queen Elizabeth, she has been through many Prime Minister since winston churchill. It is rare that she has received a Prime Minister who is in such a week position. Jonathan you have to wonder how unimpressed she is by the decision to call the election. You are a market for discipline, you are with bloomberg. The individual in that car is coming to Buckingham Palace to form a government and seek position from the queen permission from the queen. Lets say we wake up monday and it crosses your screen on the bloomberg that the Prime Minister resigned. What does that mean . How do you distill that . Its a fair question. The way i would look at it is i think how the market would look at it or it it. It would be uncertainty. The market doesnt like uncertainty. I would argue actually that the status quo remained in place. Minister,ained prime that would be a better outcome as far as the market is concerned. If we look at how the markets are responding, two things stand out. There is very little contagion outside the u. K. It,ndly, just like gregs the pound is taken the brunt brexit, the pound is taking the brunt. Theould come in monday and pound would take another loss. Got two cupsve has of coffee because he hasnt slept. I wish he could see what happening around the desk. Thank you very much. I dont think many people anticipated this time. It wasnt about if, it was about how big would her majority be. She hasnt got one. Alix everyone said this is a good thing. It makes sense. And unbelievable slide in those seven weeks. You are talking about that kind of uncertainty. Michael is here. We saw that it is isolated right now to the u. K. If we were to wake up and she is resigning, and what point does this spread out . Neede learn that you dont to hedge any Political Risk . We have seen all sorts of Political Risk over the last several years. When Vladimire Putin was moving on crimea, the vix moved up two points for a day and a half and went right back down. ,ven if you go up in history back to the day jfk was shot, the market only lost 3 and rallied the following day. That was a very low environment. I dont know if these types of events, the u. K. Is an important country, its not the size of the eurozone, the u. S. , china. There may be an interesting fallout here. The eurozone has the giant economy and has all sorts of existential crises looming. I almost wonder when you see what happened in france recently seeming to merkel solidify her power, what the eurozone is drawing strength off this chaos in the u. K. And at the same time trumps lower polls , this is the pope populist post populist seen. The eurozone a stronger for this. If they show up in the negotiations with engl