Transcripts For BLOOMBERG Bloomberg Go 20160629

Scher. Alix and David Cameron is about to be questioned by Parliament Members over the future of britain. First, we want to take a look at the second day of relief rally. It seems like the cat is still dead and bouncing. Jon it is a day of gains, but the Prime Minister has started to speak. Lets take a listen to Prime Minister David Cameron. Cameron iter expressed the you ks condolences and to offer assistance. Details are emerging, but we stand as one in our defiance against these barbaric acts. This week marks the centenary of the battle, and there will be a moment of silence on tuesday morning. I will be speaking at a memorial near the battlefield. It is right that the country pauses for the sacrifices of those who lost their lives during that conflict. I shall have further such meetings later today. Mr. Carmichael . May i associate myself with the condolences to all those who have been affected by these dreadful attacks in istanbul . He has served this country. It alone, not done and it is right we should acknowledge the support that he has had, as we all have had, for the families. He attendgoes, will to one matter that when he was in opposition he described as doing enormous damage to the model of the country, and that is the involvement of the Security Services at rendition . Sir mark allen will not be prosecuted for what he did. Will he reinstitute, so that wehe can ignore what was done in our name . Cameron may i think the general the gentleman for his remarks. Important point about the libya rendition issue. The government cooperated fully with the Police Investigation into these cases. Show that there was significant evidence to prosecute or there are very few countries in the world that would have had such an independent and thorough investigation into an issue like this. , asink the right approach peter gibson the finished the report he was able to do, i think they should continue to do so. Thank you, mr. Speaker. Said, andnd has putting Current Events into perspective come at 7 30 this friday, we will start the process of remembering the battle. There has so much been done to ensure that our young people will learn the lessons of the past. And forgetting our current challenges, with the join me in encouraging everyone to remember, salute, and commemorate those who made the ultimate sacrifice . Prime minister cameron i join my honorable friend enjoining all those who organize these honorable events. There are events up and down the country, and i think it is important. 57,000 people were killed or wounded on the first day of this battle. But also so many people are learning about their own families involvement, and there is a link between the Current Events we are discussing, the importance of keeping peace and stability on our continent. It was noticeable at last nights European Union dinner that the french president actually mentioned the commemorations, and how proud he was that we would be standing together and remembering their sacrifices all those years ago. Corbyn . Y thank you, mr. Speaker. I would like to echo the Prime Minister in commemorating the people who died at the attack on the istanbul airport. I would also like to thank him for referring to the memorial on friday and i look forward to being with him there at a Memorial Service of those who died in that dreadful battle. It would also be appropriate if we paid tribute to patrick mayhew, who died last weekend. He was the driving force behind executiveg street that led to the ceasefire. The piece that we have in Northern Ireland is in part because of him and all that we have achieved. Mr. Speaker, what people in the country are worried about is the extra insecurity to their Living Standards jobs, wages, and pensions following the eu referendum. We have heard uncertain words about the future of some of the Major Companies in europe, like siemens. What meetings has the chancellor had between those companies and others to try to stabilize the situation . He is absolutely right to hatin chen to mention trick mayhew. He was also a brilliant attorney mention patrick mayhew. He was also a brilliant attorney general, and was a kind and goodly man. I was very sad to hear of his passing. To him by hisge wife shortly before he died, and i know many people in this house want to send good wishes to his family. The leadership rightly asks what progress we are making to do with the economic challenges we face. We are in a strong position to meet these challenges because we have paid down so much of our deficit. We have had strong growth and job creation. But i do not belittle at all the consequences will be difficult. There are going to be some very choppy waters ahead. We have got to find the best way through this and one of the things we must do is talk with businesses and reassure them about the stability there is today and the strength of the british economy. The business secretary has met with a whole range of businesses already. Tomorrow i have the meeting with my Business Advisory group, and i am inviting other business to that, including siemens. We want to talk about the reassurances of stability we can give now. Circumstancesour do not change until we leave the European Union. And i want to hear from them about what they think will be the right course of action. Jeremy corbyn . Corbyn the chancellor pledged to keep a aaa rating. Made of the government this downgrade in terms of borrowing costs, and are there risks to Pension Funds . Prime minister cameron the Credit Rating by one agency has been taken down by several points, and another has put us on watch. To answer the question directly, the cost to the exchequer and the taxpayer will depend on what happens to the Interest Rates in the market at which britain can borrow, and he is right to draw attention to that. Draghi conrmsio this last night all of the warnings were that if we voted to leave the eu, there would be difficulties in terms of our own , andmy and growth rates instability in markets. We are seeing those things. We are well prepared for them in terms of the reaction of the bank of england and the treasury. But there is no doubt in my mind these are going to be difficult Economic Times. We must maintain our Strong Economy so we can cope with them, but we should not belittle those challenges. We are going to have to meet them. Jeremy corbyn . Jeremy corbyn everyone across his house should be concerned. From businesses and investors are that the u. K. Is less attractive, putting jobs at risk. Will the Prime Minister consider suspending the chancellors role . Prime minister cameron i do not believe that would be the right approach. Hear,usiness needs to what consumers and investors and people concerned about our economy want to hear is that we have taken huge steps over the last six years to get the budget deficit down, to make the british economy more competitive, to make it attractive for investment. They want those things to continue. If we see economic difficulties, one of the ways we have to react to that is to make sure our public finances in the economy remains strong. We should not have taken all of the steps in the last six years to get the deficit down in order to see us get in to a more a morelt pass to difficult path. There are three phases to this. The first is the volatility we see. The second is the uncertainty about britains future status, which we need to bring to an end as fast as possible by examining the alternative models. And then choosing which one we should go for. Then we need to bear in mind the longterm damage to the british economy is based on how good our trading relationship will be with the European Union. For my part, i think we want the closest possible relationship in terms of trading with the European Union. That is something that can be discussed and debated in this house, as well as by the next government. Jeremy corbyn . Jeremy corbyn this week there the lastvidence that alone, there days have been attacks. Reports has he received from the police and what extra resources are going to communities that have been targeted in these vile racist attacks that have been taking place . Prime minister cameron these attacks are appalling and they need to stop, but it is right that everyone in this house and everyone on all sides of the referendum debate utterly condemn them. That is not what we do in britain. We do monitor these attacks, but i can tell the house that we will be publishing a new action plan on tackling hate crimes shortly, to step up our response and we want new steps to boost reporting of hate crimes and supporting victims, new cps guides to prosecutors on racially aggregated crime, new protective security measures, and additional funding to Community Organizations so they can tackle hate crimes. Whatever we can do, we will do to drive these appalling hate crimes out of our country. Thank you, Prime Minister, for that answer. The rejection of a status quo that clearly is not deliberate, there are now 13. 5 Million People living in poverty in the lastup 300,000 in year. 4. 5 Million People in england alone are in insecure work, and two thirds of children in poverty are living in households where at least one adult is in work. The Prime Minister has two months left. Will he lead a onenation legacy, and will that one hyphenation legacy be the scrubbing of the bedroom tax, the banning of zero out contracts, and canceling of the cut to universal credit . Prime minister cameron where i would agree with the gentleman is of course we need to do more to tackle poverty, we need to do more to spread wealth and opportunity. But to try and pretend that last thursdays vote was a result of the state of the british economy is complete nonsense. The british economy is incomparably stronger than six years ago. We all have to reflect on our role in the Referendum Campaign. I know the honorable gentleman not back into it, but i would hate to see when he is not trying. Mr. Speaker, government figures released yesterday show the number of children living in poverty has jumped by 200,000 in one year. This disgraceful total of 3. 9 million children in this Country Living in poverty does he not think he should at the least apologized to them and the parents that have been failed by his government, and do something about it so that we do reduce the level of Child Poverty in this country . Prime minister cameron if he wants to do with the figures, let me give them to him. He asks about poverty. There are 300,000 fewer people in relative poverty since 2010. Half a million fewer people in absolute poverty since 2010. If he is looking for excuses about besides he and i were on about the referendum, frankly, he should look somewhere else. I have to say he talks about job insecurity, and my two months to go, it is not in the for heavens sake, man, go. Mr. Corbyn thank you, mr. Speaker. Thank you, mr. Speaker. All of us have constituents then need to be addressed in for weeks and weeks, my constituents have been struggling with the impact of unofficial industrial action on our railways per not over jobs, not over wages, but over who gets to press the button. Jon oh, the quirks of british politics. This is a weekly opportunity for mps and the Opposition Party to grill Prime Minister David Cameron. We will be keeping an eye on this and listening to it for any comments potentially on brexit and the british exit from eu. Statement from the Prime Minister on the summit he attended in brussels yesterday evening. Let me get you up to speed quickly on what is happening with global markets. We would like to continue to follow the Prime Ministers questions or you can do that on 134. 39. At 1. 3439. I want to bring in Francine Lacqua and guy johnson. Francine, the quirks of british politics. It, it wasot to funny. Francine the problem is there is a resounding movement in the country that this is funny, David Cameron retorting to Jeremy Corbyn is funny, but underlying, it is not. We have Jeremy Corbyn, the opposition, his leadership going nowhere. So we do not have an opposition. This is probably not as funny as they make it out to be in parliament. Guy we will see exactly what happens as it carries on. Alixjon i am getting a big red headline, and there was some suspicion that we reported that was injecting funds into the Financial System in italy on the back of what they suspected was systemic risk. Germany set to oppose shielding investors in italy bank planning. It shows you the ramifications from brexit across europe, the concern about the banks. Guy not everybody is on the same page here. Of thee a quick comment italian banks they have been a mess. Puts theit does, it focus and the spotlight on the weak spots. Expect more bad news for a lot of the banks. Guy germany is saying this is not a systemic event that allows you to get around the rules and you are not allowed to do this. This needs to be a private sector involvement story. I would not terribly rulebook because britain has done what they have done. Jon we have a political vacuum in the United Kingdom. We have an incredibly fragmented eurozone and European Union. It appears to me we have two crises. Potentially quite strongly, but clearly he is trying to do something about the banks. President draghi is saying it was time to fix it, and he was talking about the banks. The whole of europe has not got its act together. They have had problems for a long time and they have been slow in taking it. Matteo renzi is facing the consequences with a referendum on voting in september. Problem is that political turmoil, if you do not have someone who can start negotiating, banks in the u k and the city of london will start freaking out because you do not know what you are looking at. Guy Angela Merkel is trying to stamp her authority back on the european space, and she is doing it with brexit and with the italian banks as well. Jon fascinating news coming out of europe. A special thanks to Francine Lacqua in london, and of course guy johnson. Live to the bloomberg terminal. We will be going back into that conference over in parliament when we expect Prime Minister David Cameron to make a statement on the eu summit yesterday in brussels. David . David alix and i are remarking how Different Parliament is from the u. S. Congress. We cannot imagine that type of Exchange Going on here in washington. Welcome back, charles. Lets pick up on what Prime Minister cameron was saying. He said the british economy is in in comparably better shape than when he took over, but they have some very difficult Economic Times ahead of them. What does that mean for your the foryou are advising the people you are advising in terms of general investments . Theles we do not think bear market will end until the incks are down 50 , sometime 2017. We are underweight the second session on a shortterm trading basis. We are facing an earnings recession certainly in the United States and europe on the banking industry. David does Brexit Change that climate at all . Germanyheard that reportedly is resisting the effort for italy to inject capital into the banks. Charles it accelerates the probability of the risk of a global recession. But you mentioned italy. If you look at the debt spread of the italian bonds versus booms, the debt spreads have been spacing for two years. They are starting to get wider, and it is starting to show market concern about the governments need to rescue the italian Banking System. Alix does it show enough concern . Charles not yet, no. We are not even close to where we were back in 2011, when we had the last european debt crisis. I think we will get back to those levels. Alix we have talked about the destruction we have seen of the u. K. Bank stocks. Stops re u. K. Bank bank stocks you are noticing some kind of the virgins. You can see what we are talking some kind of diversions some kind of divergence. Bank of america is the white line. There is so much more risk in those european banks, and bank of america is one of the riskier u. S. Banks. Charles the credit default swap spreads for bank of america and citigroup, which is your money center banks, is tight. They are not back to the levels they were in february of this year when people were worried about a recession. We are seeing a lot more concerned about european banks because they are undercapitalized and they have big credit issues from the 20082009 financial crisis. David the way we had it in the red states do you think we can get back to the way it was in 2008, 2009 . Follow thedo not european banks specifically, but i would not be surprised if the governments had to inject capital as an interim bridge step. Jon wish that alix which they have not. That is one of the reason italy is in bad shape. Italy needs permission from the European Union in order to do that. Thats get back to bank of america. We have the second wave of the stress test that will get underway at 4 30 eastern this afternoon. This is all important because it determines whether the banks can give capital back to their shareholders, whether through dividends or stock buybacks. What do you expect at 4 30 this afternoon . Banks willl of the be given the ability to return capital. Fundamentally it is a big positive. You will see sharing purchase programs of 2 to 5 . You will see dividend increases of mid to high single digits. That is attractive. You will see payout ratios of centers, 50 money 100 for trust banks. Fundamentally it is a positive. My problem is as markets get made as the margin, expectations of capital returns there could be some disappointments. Alix what is your estimate . Charles i do not have an estimate off the top of my head for the group, but i think you will see individual disappointments, like huntington bancshares. Thats like huntington, bankshares. There is a minor chance that like huntington, bankshares. Criticalarren has been that the Banking System has not been analyzed for those failures. David talk about the differentiation between the big banks. You think bank of america, there could be a surprise to downside. Charles i think i am at 6 billion in terms of total capital return. I have seen reports on bloomberg as high as 9 billion. So there is a big spread between what i think banks can do and what others do. Alix are there any at this point that are cheap enough they have gotten so beat up. Updated suntrust we upgraded suntrust yesterday. They will have these earnings relative to their valuations. Citibank will continue to grow book. We do not see the u. S. Banks diluting their capital in the next recession. David that is charles peabody. Thank you for being here, charles. Up, the u. S. On the numbernveiling a telling poll on how americans really feel about brexit. Plus the u. K. Prime minister is set to be making comments on yesterdays eu summit and how the country will proceed. It has been a fiery q a at parliament. 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. Alix jon from london and new york, this is bloomberg. The primary is to his questions happening this wednesday. As it does every single wednesday. A little bit of added spice this time, with the u. K. s historic decision to exit the European Union. We are awaiting a statement from Prime Minister cameron on the eu summit that took place in brussels yesterday evening. We expect that statement imminently from the Prime Minister. We will bring that to you live on bloomberg. You can follow this on the bloomberg terminal. Lets get you up to speed on the markets friday, monday two days, riskon with a ftse up by two for Percentage Points per that is the twoday rally after dropping 5. 6 in two sessions alone. Get to the other board quickly and i will whip through the asset classes. We are still trading very close 130hose 31year lows with a 4. 40 5 with a 1. 3445 handle. Treasury yields are still coming down. 1. 45 issis point, your yield on the u. S. 10year. Lets go over to shery anh for an update on what is happening in turkey. Shery turkey is blaming Islamic State for the suicide bombing at the airport in istanbul. The three bombers opened fire and blew themselves up after Police Spotted them. At least 41 people were killed and 239 people wounded. A turkish official says none of the attackers got past security. Kurdishamic and militants have carried out bomb attacks in turkey. Donald trump has made a clear break with the Republican Party on trade. In a speech in pennsylvania, he ripped a pending transpacific trade agreement. He said freetrade is a deliberate attempt to boost growth outside the u. S. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus i am sheryworld, ahn. This is bloomberg. We are waiting for Prime Ministers David Camerons statement to parliament and we will bring it to you as soon as it happens. In the meantime, we will talk about the morning mustread. We would ask u. S. Voters how they think brexit will affect them. We are joined by megan murphy, our Washington Bureau chief, to talk about a new morning bloomberg consul poll. Tell us about what we found in this poll. Megan brexit is not animating people in the u. S. To the extent as it is in the u. K. And europe, but people think it will impact their portfolios negatively. They do worry that brexit will have an effect in the u. S. David we talk about brexit a lot and we do not know the extent to which the people in the real world are paying attention, but they actually are paying a lot of attention. Megan of course they are. This is a seismic decision that will affect the world. While voters may have been late to the game because of the impact, they are very concerned about how this will impact not only real estate but how their investments will they are trying to find where is the way through this thicket of Political Risk. Alix we saw on the part chart, the 34 that think brexit will impact the u. S. Economy. Is it impacting the u. S. President ial election . Megan the majority of people think that Hillary Clinton will be a better steward of the economy in these waters. To some. Urprising in recent polling, we have seen her make a big gain on this front in terms of establishing him sir self establishing herself as more president ial to whether these kind of storms. That is a significant shift. David two or three weeks ago there was another morning that showed that people invested in the market, they prefer donald trump to Hillary Clinton. Had a pretty torrid few weeks. He tried to seize the agenda yesterday with his economic agenda, saying i am really going to try to seize on this wave of economic populism in the u. S. , in the u. K. , and in europe, and make a stand. He rejected almost everything the Republican Party has stood for for years on trade. But he sees his marker as Going Forward in terms of marking himself out as the man who will represent the workingclass voter. That is the voter where he sees his pathway to victory, and he will try to mark this out. Whether or not he wades into brexit again, remember, he was a supporter of brexit. David he did not hold back. It was not just the Transpacific Partnership that has not been brought to fruition. He said he would get out of big out of nafta. Is that something president can do . Take use said i will out of nafta, out of ptp, name china as a currency manipulator, and make sure every deal that we have ever struck is beneficial to the american people. This was his speech yesterday which is anathema to the core of the Republican Party, so much of what they have said on trade. He is against globalization, saying it has a negative effect on the american economy. A moment or is longterm in terms of his actual position and where he is going to go when you say you are going to take us out of nafta, we are going to mark ourselves in terms of what nigel farage has said in the u. K. About standing up against the rest of the world, that is the moment he is trying to seize on. Waiting on Prime Minister David Cameron. The q a was getting relatively ugly. We have trumps antiglobalization, but if the fallout from the u. K. Is so dire and it seems the politicians are speaking to it, wont that have to change the trump debate . Megan that is the question we are watching. As he moves forward, the question will be, will the fallout hurt him enough that Hillary Clinton will be able to , orhim with that brush whether it becomes a moment that david iron reminded of how confident i am reminded of how confident the elites were going to the vote in england. There is a danger in the United States that we might fall prey to the same thing, that we think we know better that International Trade is great. But there is a substantial part of the populace who is leery who have lost their jobs. Isnt that a challenge for Hillary Clinton . Megan there is no sentiment there is no question that the sentiment is antielite, and that is the overriding sentiment right now. The risk of that is when you go in and you think we are going to blow this with an absence of a plan. Have atrump is to solidified plan that he can take to voters and say we can do this but we are not going to have what has happened. We have truly the implosion of the labor party, the conservative party. Alix and that is a political implosion sprinkled throughout the market over the last few days. Guest i wanted to try to quantify the damage that has been done to the markets with Investor Sentiment in the u. S. On the u. K. All you have to look is that all you have to look at is the ew massive outflows that you see there. if you read the etf flow tea leaves, which say some interesting things, there is a slight conflict. If you look at spy, 7 billion in outflows. Traders, institutions the vanguard s p 500 tracks the same stocks inflows. It is a typical drip, drip inflow. Vanguard and swap, which took money the last couple of days, when they see inflows in the drip style, that means the asset allocators retail does not seem to be that spooked. Hot money is spooked, but they get spooked easily. Hot money goes out on one little word somebody says. But retail money, if we saw money coming out of vanguard and schwab, that would be an armageddon scenario. However, gold gold is where retail and institutions all agree. Gold has been the story all year. Friday and monday we have seen the gold trend on steroids. We saw a billion dollars it has taken in more money than it ever has in its history of existence. Alix which blows my mind. Eric gold is the story of the year. When you look at gld, everybody uses that. Andrdless of your tastes, when you see flows going in that deep into all different kinds of tickers doing all different kinds of things, that means there is a depth to this feeling of gold. Somebody wrote an article yesterday about how to populismproof your portfolio. If people do feel there is a wave of populism, gold is going to go even higher. Lookinge are constantly when we ask people, we have seen what is happening with brexit, are you ready for a donald Trump Presidency . Are you ready for a Hillary Clinton presidency . Do you think the money will turn into real money . Eric it all depends on what happens right now. It depends on gold and utilities. We are going to jonathan now because the Prime Minister is about to speak. Jon David Cameron is making a statement in parliament. Before then discussion on britain, there were a number of items on the agenda. The council noted the significant reductions in the legal crossings from turkey to expressedt it continued concern over the Central Mediterranean route and the determination to do more to combat people smuggling by libya. Britain continues to play a leading role in operations there with hms enterprise, and i can the weapons to terrorists flow would be stopped. Secretarygeneral stoltenberg gave a statement during the summit to think that our security. Theimportant commitment on digital Single Market, including the eu, residents will be able to travel with the Digital Content they purchased or subscribed to at home. On the economic situation, the president of the European Central bank gave a presentation. Private sector forecasts discussed at the council included estimates of a reduction in eurozone growth, 1. 3 andly between 1. 5 . President draghi reassure the council that the ecb has worked for the bank of england for many months to prepare for uncertainty. In the face of continued volatility, our institutions will continue to monitor markets as necessary. Returning to the main discussions around britain leaving the eu, the tone of the meeting was one of sadness and regret, but there was an agreement that the decision of the british people should be respected. We had positive discussions about the relationship we want to see between britain and our European Parliament and the next steps on leaving the eu, including some of the positions that need to be worked through, and the timing about triggering article 50. While britain is leaving the European Union, we are not turning our backs on europe and they are not turning their backs on us. Many of my counterparts talk about the history and the values our countries share. The estonian Prime Minister described how the royal navy helped secure the independence of his country a century ago. The czech Prime Minister paid tribute to britain at home. Many countries in eastern and Central Europe expressed the debt they feel to britain for standing by them under the threat of communism. President whole lot talked movingly about the visit he and i are making later this week to the battlefields where the british and french soldiers died for the freedom of our continent. The council was clear that as we take forward the agenda of britain leaving the European Union, we should rightly walk to have the closest possible relationship in the future. This includes the strongest relationship in terms of trade, and security. As i said on monday, as we work toward the will of the british people, we have a fundamental responsibility to bring our country together. We will not tolerate hate crime or any kinds of attacks against people because of their ethnic origin. I reassured european leaders over their concern over what is happening in europe. We are a proud multifaith and multiethnic society. Was a lot of reassurance that until britain leaves we are a full member of the European Union, meaning we are entitled to all the members of all the benefits of membership until we leave. We discussed some of the issues that will need to be worked through. I explained there was great concern in britain about the movement of people and the challenges of controlling immigration, as well as concerns about the issue of sovereignty. In turn, many of our European Partners were clear that it is impossible to have all the benefits of membership without some of the costs of membership. That is something that the next Prime Minister in the cabinet will have to work through carefully. On the timing of article 50, contrary to some expectations, there was not clarity for britain to trigger this. The overwhelming view of my fellow leaders it was that we need to get this right. Everyone wants to see a clear blueprint in terms of what britain thinks is right for its future relationship with the eu. As i explained in my statement monday, we are starting this work straight away. Unit will examine all the options and possibilities in a neutral way, setting up the cost and benefits so that the next Prime Minister and cabinet will have all the resources they need for the right outcome to try to negotiate. The decisions that follow from this, including the trickery the triggering of article 50 were rightly go to the next Prime Minister. I do not think it is a secret that i have at times found discussions in brussels frustrating. Despite that, we can be proud of what we have achieved, whether it is putting a greater focus on jobs and growth, cutting the eu budget in real terms for the first time, or building, positions on issues of national security, such as sanctions to stop iran from getting a nuclear weapon. Standing up to russia in ukraine. In all these ways and more, we have shared how much more we have in common with our European Partners as neighbors and allies and friends who share the fundamental values, history, and culture. We mustreminder that continue to Work Together for the security and prosperity of our people for generations to come, and i commend the statement to the house. Jeremy corbyn . Mr. Corbyn i would like to thank the Prime Minister for an advance copy of the statement. About the pleased more conciliatory tone then nigel farage did in the European Parliament yesterday. Negotiate our exit from the European Union, the british people are relying on a government to facilitate a positive transition. If we are to achieve this, we must proceed in a constructive and decent manner. I look forward to joining the at theinister commemoration on friday. I think the Prime Minister for that. Yesterday, the Prime Minister said at the Eu Council Summit that in order to strike a new relationship between britain and the European Union, european leaders would have to offer the u. K. More control over immigration. The threat of losing access to Single Market means that we are already seeing a negative effect on investment and business in this country. On monday the Prime Minister said access to the Single Market without accepting Free Movement was impossible. Does the Prime Minister now believe that britain can negotiate an unprecedented deal . Can he also spell out a little what further discussions were held in this area . This is an issue in which there needs to be an open debate. There i say, an open, straight talking debate that absolutely failed to arrive during much of . He Referendum Campaign article 50 will not be triggered until the successor is in place. I heard what he said about the views of other leaders at the summit. When does he expect article 52 actually be triggered so we will know what the negotiating timetable is . When does he expect article 50 to actually be triggered so we will know what the negotiating timetable is . Does the Prime Minister feel that without the structures in toce for the house to be lead a discussion in our community, that there is a risk of leaving britain in a state of paralysis at a time when people need clear answers to their concerns . Would he also be able to tell us if there has been any further thought about the role of involved governments in future negotiations with the European Union . We have seen the first minister of scotland create her own separate negotiating group, and it appears the minister of gibraltar is doing the same also. What conversations has the Prime Minister had with the first ministers in scotland and wales, and what legal advice has he received on separate by thetions administrations and in overseas territories . Last week possible to leave the eu means this country is currently in an unstable position. The next steps we make may be our most important and must be taken with character and we have a duty to reshape and rebuild the economy for the future. One that protects social and employment rights. And builds new policies on trade, migration, environmental protection, and on investment, and delivers a country in which prosperity we create is shared by all. Therefore, i urge the Prime Minister that what our economy needs now is a clear plan for investment, not further austerity and cuts to public services. That is a chance to put forward that was put forward yesterday. I urge the Prime Minister and his successor one more time to look at the suspension and offerably the termination the more counterproductive fiscal rule. I thank the Prime Minister for the assurances and condemnation attacks andacist abuse wherever they occur in this country, and i join him in that. Languageed to calm our and tone, and of course all parts of this house condemn racism within our society. Will he also reiterate absolutely his assurance to European Union nationals working here, providing support in our Health Services and so many other services, that they are welcome and that they remain welcome for the working contribution they make . Our country is divided, so we we must heal the division. Our economy is fragile, so we must work to rebuild it. We must build a new relationship with europe and build a britain that works for everyone in every part of this country. Prime minister . P. M. Cameron let me thank the gentleman for his response. He is right that construction is the correct word. I was pleased that the discussions last night did not get off to a tone of European Union countries demanding this set of actions, britain arguing for that set of actions. There was a mature and calm understanding that we need each other, we need this negotiation to proceed well, and we need a good outcome. I think this got off on the right foot, and i will do everything i can, whether in this job or as a backbench mp, to make sure we keep the strong relationships with our European Partners because we are going to need to. On this issue of immigration versus the Single Market, he is right that this is the biggest and most difficult issue to deal with. Re in thewhether you a European Union or out of the European Union trying to secure the best possible access to the Single Market. My answer was to bring in the that i restrictions negotiated, which were incredibly tough to negotiate. Sad that they fall away because of the referendum decision. I personally think that access to the Single Market and the strength of our economy is the single most important issue that they have to deal with. 50, itissue of article is a matter for the next Prime Minister. Before you go into the tunnel of the article 50 negotiations, which have a twoyear time limit, you want to have made the it will help britain and other European Countries to understand what it is we are shooting for. They have said no negotiation without notification, but i do not think that includes discussions the new Prime Minister can have with partners or institutions so that we can get off on the right foot. That is the strong advice i would give to them. I have had conversations with the first minister of scotland, the first minister of wales, and in Northern Ireland. I continue to do so. I want their voices to be heard loud and clear. Advice, thelegal legal advice i have seen is that this is a u. K. Decision, made by the United Kingdom government, the United Kingdom parliament, and it has to be done that way. We should all reiterate the statements we have made to you nationals we are here. We should thank them for the contributions and say that their rights are guaranteed while they remain in the eu, and we will to maked and will want clear that they want to safeguard the rights of people who work and study here from the European Union. Them. Ill be a matter for finally, what he says about suspending the fiscal rule, it does feel like whatever the problem, whatever the issue, the issue always seems to be more spending, more taxing, more debt. , that is not say you do not get investment unless you have economic stability. You do not have economic stability if you do not have a plan for dealing with your debt and your deficit. Worldas been included the over, including in some of his favorite countries like venezuela. Sir william cache . My friend quite rightly has referred to you have been listening to Prime Minister David Cameron making a statement here in the United Kingdom, after an eu summit yesterday in brussels. We bring in Francine Lacqua and guy johnson. Lets begin where he started. Article 50, despite what people think, not a huge amount of pressure from european leaders to trigger formal discussions immediately. Francine, what did you think about that . Prancing co am not sure what to think of but francine i am not sure what to think of it, but i do not know if it is the kind of hope that people in london feel that by delaying something happens, either a second referendum or a general election, which is very unlikely. But i do not know if there is a feeling in brussels that they can delay in the hope of change. Possible, but unlikely. Guy everybody is talking to their domestic audience. Europeans are talking to their domestic audience, saying lets get on with it, lets be hard on these people. We should not follow them down the same road. Cameron is talking to his domestic audience, saying we are in no rush, we can do it on our own terms, and that is the way it is going to work. Jon jeanclaude junker comes out yesterday and says Jeanclaude Juncker said yesterday that you notify us, but you have a remain campaign and you have two weeks. That is a very different tone, isnt it . Francine he is quite emotional. You have seen that from Jeanclaude Juncker. There is a strand of brussels bureaucrats who are taking this extremely badly because they see it the european summit wraps up in brussels. We can go to it right now. Lets listen in. After theuation division of the United Kingdom, and what this means for our future work, how do we proceed in the future, and we agreed on we actually had a very profound discussion on the principle, that we were then able to summarize in a brief statement. We express yet again our regret about the decision of the citizens of the United Kingdom, but we state very clearly that we obviously respect this decision, and that at any rate until the United Kingdom leaves the European Union, it shall remain a member of the eu, and all right rights and obligations continue to apply. We refer to article 50 as a legal basis, according to which the exit will take place, and we also state very clearly that the British Government needs to declare its wish to leave, but that we hope and trust this will happen as quickly as possible. We also outline yet again that before we receive official announcement of the u. K. Wishing to leave, no negotiations whatsoever can take place. We also state very clearly that the European Council abides by basise 50, and on this there will be guidelines, formal negotiations of agreement and the European Council and the European Parliament, obviously in accordance with the treaty, will play their respective roles. If article 50 states the union it refers to all of the institutions, that is to say the European Council, the European Commission, and the european sayingent, we were all the European Commission has the necessary expertise and we will say that for the United Kingdom needs to clearly state its intention as to how it wishes to shape its future relationship with the union, that it needs to outline this, and we point out access to the Single Market, to the internal market, will only be possible with due respect of the four freedoms. In the last three points of this statement, we talk about how we deal with the matter at hand, we say we are decided and determined to remain united and to deal with the challenges of the 21st century. We point out the historical importance of the union, it also the fact that the union needs to give prosperity and security to its people. We talked a lot about these issues. Security of external borders against the backdrop of migration, we talked about ,rowth, about competitiveness and also about young people in europe. We want toided that further discuss these matters in some greater detail. Therefore, we shall meet for an inal meeting accordance with our strategic agenda, we shall discuss future , we wouldhe way ahead like to give incentives, take stock of where we need to become better and faster, looking at the challenges ahead and remind ourselves of the strategic agenda. The strategic agenda was something new, something that never existed before. The European Council and the European Parliament work on the same basis and along the same this term of the commission. Committed, all of them, to competitiveness, job growth, to empowerment of the citizens, climate protection, energy policy, and also the area of justice and the law, and to commit oneself to all of these priorities. Haspresent Commission Already introduced a new mode of work, a lot of proposals fell by the wayside. Regulation was simplified. No treaty change. We can work on the basis of existing treaties. We have to streamline it. We need to cut red tape and we need to focus more on what we need to achieve. Jobs,d creating creating competitiveness is necessary, to take one particular example. We are going to continue to build on this in september. Let me use this opportunity because we come towards the end of june. I would like to thank the dutch presidency. They had a very busy time of it. I think we made a lot of progress in combating trafficking and trying to combat illegal migration. I worked together with our neighbors and this is going to be continued by our slavic partners. I would like to thank the dutch presidency. Great. There are a number of Member States jon you have been listening to german chancellor Angela Merkel speaking. We have had some comments from David Cameron as well. Just putting some of these comments together. In on thislp on zoom informal discussion phrase. I wonder why there is so much emphasis put on a lack of desire for informal discussions. Ask european politics european politics. Youve got to realize this. You wonder what Francoise Hollande is saying in the next room. You have seen this time and time again. The greek crisis, everything. Informal talks, there is a sense of friendliness. Certain politicians in europe might say no informal talks. Once you invoke the article, they cannot turn back. Is this a push to shape who the next Prime Minister is . Are we trying to shape that . You have a bunch of investors watching bloomberg tv. I am struggling to digest the complexities of the politics coming out of u. K. Alone, never mind europe. It depends whether you believe the talks will be taking place. Do they go through the commission or do they not go through the commission . This is so dependent on which route we take in the u. K. , so many options. Francine if you look at some of the tabloids in the past, they say even calling the vote was internal fighting between two Public School boys. Boris johnson and David Cameron. The conservative party, they are taking their time to elect somebody. They do not know who they are facing. We do not know anything about financial passports. Even if they do have these informal talks, we have no idea what they will focus on. I do not know how they answer that. This will go on and on and on. I think if you are running a business, start running your business with the idea that this is the new normality. Francine uncertainty. You have to make some difficult decisions as a result of that. But that is the new reality. Digest thetrying to huge amount of political uncertainty. Trying to work out what the nuanced messages. As an investor, i think it gets harder by the day not easier. Markets have been down in the markets have been up. We are delighted to have her next guest have our next guest with us here. Suisse. Swe i want to start with the pound. We saw the pound really take a hit. What is your projection about where the pound goes next . We stick to that view, frankly. Facing the political difficulties we have just talked about now will add to the risk. Against the euro, the pound is only trading at the average level since 2009. This is not a currency that is cheap against Major Trading partners. Alix further downside has spread to other areas of fx. The pound is trading like an emerging market currency. When you look at the volatility, the extreme Political Risk, and you have a large budget deficit, this is typical of what we have seen in the past and emergingmarket prices. This is what the bank of england was afraid of as well. That is why i believe there is still more downside. Alix i have a fun chart with you. This is historical spread, relationship between the pound and the mexican peso. When you get to one, things are very much correlated. We are at. 7 right now. The pound and the peso are correlated. As aeso usually looked at proxy. This has encapsulated what we have seen in the last few days. Jon a terrific david a terrific chart. What does that show us . Mexico is a special case, a liquid currency. Mexico hast, different than what we are talking about in the u. K. Donald trump really does mean it when he says we have to renegotiate nafta. Something to keep in mind when we are discussing brexit. If you look at some other currencies, like the russian ruble, they have done well. One thing we may be seeing is convergence of Political Risk. Russia and brazil were hit hard by Political Risk. Maybe you are seeing some Political Risk aversions between europe and those countries. Some trades we are recommending right now david in the meantime, there is a small country called china. What is going on with the yuan . The chinese are 30s are fine with the idea of the yuan are fine the chinese authorities are fine with the idea of the one. On the other hand, they do not want to fall to quickly in an unstable way. Alix the white line is the offshore yuan as it rises. Big, thehat gap gets market tends to worry that instability is coming through. Alix great to see you. Thank you very much. Grade. Up, making the guest discusses what the second half of the year will hold and what will drive the gains. This is bloomberg. David yesterday, there was a terrible terrorist attack at in the stumble airport at an istanbul airport. The information. The latest death toll is 41. The wounded has risen to more than 230. No one has claimed responsibility for this attack. The Prime Minister is laying the blame on isis. Onkey is dealing with terror two fronts, the Islamic State group. Kurdish almost 300 people have died in terror attacks in istanbul and ankara alone. Tourists are staying away, of 35 dropped to a level from the previous year. Investors are shrugging off keys internal to malt turkeys internal turmoil. Aviation stocks are down about 1 . David thank you so much. Alix i want to turn our focus to brussels. I want to bring in ryan chilcote. They gather there for the first time, minus a member, of course. It just ended, what was the big result . Ryan this meeting was supposed to be about the future of the European Union. That is why they gathered, minus David Cameron. How they were going to conduct the negotiations. Some of it sounds technical, but was actually very political. The political leaders and the European Commission, the executive arm that represents the collective will, political leaders were saying to the executive commission, you are on the sidelines. This will be a politically driven process. That is what a lot of what was discussed today. . Hat will be the principles they repeated that if the u. K. Wants access to the Single Market, it has to allow the Free Movement of labor into the country, which would appear to be a redline in the u. K. Alix thank you for joining us. All of the sending reverberations through the market. Jon some Companies Looking to increase their stakes. I want to cross over to julie hyman. Julie it has to do with one of these battered companies. Iag, the owner of british airways. Furthernsidering increasing its stake in iag. It has lost about a third of its market value. There has been particular focus and concern about global travel, travel in the u. K. , the effect of currencies on u. K. Companies and travel. Iag and a spike it is seeing on this news. It is not very far into the green. Qatar airways already iags largest shareholder. It is considering boosting its stake to 20 from 15 . Posted on thatu story. Lets get back to monsanto. About 1 . Own by now they are little changed. Even after monsanto reported profit. Agriculturalthe market. We will continue to check on those shares and bring you some other movers later in the show. Issuance fell off a cliff. Joining us now is Goldman Sachs partner and head of Investment Grade Capital Markets and risk management. Explain what is going on. Cliff st week, the the fall off was driven by the anticipation of what would happen with brexit. Whatall off was a pause in is otherwise a terrific market. Investment grade issuance is running ahead of last year. We actually expect that to continue. Alix not only that, in terms of issuance being down, we have returns in Investment Grades for the first half of the year at sevenyear highs. Do you expect those kinds of returns to continue . Susie we do expect returns to continue. Further. E rallied the underlying treasury rate has rallied by about 30 basis points post brexit. U. S. Companies are fundamentally very healthy from a credit perspective and credit spreads will continue to tighten. There is a flight to quality into investmentgrade credit as investors move out of equities, which are making them nervous, and investors move out of treasuries, which have gotten too expensive. What kind of returns are you looking at . Year, second half of the i think we would expect spreads to tighten, especially from a slight winding this week, another 10 to 20 basis points. Issuance is so attractive, yesterday, post brexit, molson coors financed 5. 3 billion of their buyout. 3 y raised tenure money at 10year money at 3 . They had to 38 billion order book. Take us through brexit. Year, whatt of the effect, good or bad, will brexit have . Susie the immediate effect of brexit for corporate spreads to widen out a bit and the bond market to turn off just for a minute. We had quite a bit of issuance slated for this week that went on hold last week. We are expecting brexit to have limited effect on the investmentgrade market. Back to the point about underlying rates, we think brexit maypole more issuers in the market may pull issuers in the market. This phenomenon where folks are moving out of equities and into investmentgrade debt. The one exception may be for u. K. Issuers who will see the cost of debt in the u. S. Rise slightly. In europe, their cost of debt may fall alix . May fall. Alix doesnt wind up masking the deterioration does it wind up masking the deterioration of the fundamentals . Is there weakness not being reflected because of the need for these yields . Susie there really is not weakness in the investmentgrade credit cycle. 22 of the borrowing is for m a financing. Some of these m a transactions are somewhat levering, but because you have companies that are fundamentally healthy, as they do love her, they pay back elever,as they do yo they pay back that debt. Share buyback, which can be levering, which has been has not been. David scotland has won the right to be heard on its own in brussels. This goes directly against what we just heard from David Cameron. The first minister of scotland is over in brussels having a discussion. The president of the Eu Commission says they have the right to be heard independently. Talk about m a for just a moment. Fisher, m a has been this year, m a has been choppy at best. Susie we took a pause and we have been thinking about what m a might look like. We need a couple of things to drive the market. One is low rates. We have that. Number two is ceo confidence and stable and observable equity prices. It is only day to, but it feels better in the equity markets. Number three, access to capital. Molson coors proved yesterday they have access to capital. We expect the pace of m a to continue as long as we have these factors in the market. Alix focusing on goldmans been as, how has merging benefit to Goldman Sachs . The combination of the two groups has been important for the way we advise clients. We advise clients on financing and risk management. A combination of the groups, you would have a client purchasing an asset outside of the u. S. , allows us to deliver a package, shortterm bridge financing, longterm financing the a bonds via bonds, a strategy to hedge the exposure to foreign currency. Tremendous synergies. Thank you very much. Great to have you. Datag up, we have economic in the u. S. Crossing. Bloombergs focus on pharma continues. This is bloomberg. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. 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. Jon this is bloomberg. Lets get you up to speed. What an interesting couple of days. Lid on the lift a stoxx 600. Italian banks leading the losses. Italy looking to recapitalize and inject some money into that Financial System. Over in the u. S. , futures positive, up about 6 10 of 1 . Breaking data in the United States, lets cross over to alix steel. , 1. 6 year on year. Still below the 2 target. Personal income coming in slightly less. Personal spending in line with 1 . Mates, 4 10 of we are spending a little bit and making a little bit. Russell price is joining us. Russell, this will not move the needle at all, right . Russell i think the improvement in Consumer Spending is a good sign. Always important to the american economy, but they are critically important to the share. Consumers are more critically important this year. Alix when you take a look at how the Brexit Impact will affect u. S. Consumers, we have a stronger dollar. Business confidence was shaken, corporate profits are getting hit. Russell businesses will be a little their confidence will be a little shaken. They will wait and see how things play out. That could Impact Business hiring over the short term. In general, the overall impact of the brexit will be very modest on the United States economy. Most of the translation impact will come from a higher dollar. Even the move up in the dollar, we are still not back at the peak we saw at the end of january. The only increase we do see in the dollar, related to the brexit, the u. S. Economy will be just fine. David we have seen the u. S. Consumer get more and more money, lower gas prices, a stronger dollar. Intoes not translate Consumer Spending. Why is that . Russell that is a big question we have been trying to figure out the last year and a half. Consumer spending has been languishing behind. It really is a matter of confidence. We did see an improvement in confidence levels in the month of june. Consumers are still waiting for further signs the economy gaining a little more traction and i think we will see that in the second half of the year. We may see confidence down a little bit in july because of the reflection of the brexit vote in the market volatility that has followed. Second half of the year, there are positive things setting up. Outside the election that will be a risk factor. Traders dotheless, not share your optimism. We have a great chart, which has to be chart of the day. Takes the probability of a fed rate cut by september, really jumping in the last few days. The probability of a hold is the. Lue line, now around 75 the probability of a hike, forget about it, 0 . Russell some very bad things would have to develop out of the brexit and other factors in order for the likelihood of a cut to transpire. If you look at the overall reactions of the brexit, we had the big downside on friday. Even the british pound has been up over the last few days. Just the shock value of that decision that has been incorporated or factored into Financial Markets and now we have a prolonged period of just seeing how things play out, which is the scenario that is most likely, i think the fed will but just that will just be on hold. David it strikes me there are two things avoiding a crisis and getting growth going. Banks seems to be helping on the avoiding a crisis part. Russell those are two distinctly different things. Liquidity is very important to avoiding a panic or crisis. This time, that was handled more easily because back in 2008, there was not enough liquidity on the sidelines waiting to be injected. This time, that was not the case. There are things that the Federal Reserve or Central Banks, not a whole lot more they can do. On the physical side, not a whole lot more with tax cuts the government can do fiscal side, not a whole lot more with tax cuts the government can do. Look at spain. Spain has been one of the primary improvement factors, one of the countries in europe that has been doing very well. They have been going through austerity. Yet they have reformed a lot of their labor market laws and rules of regulation. A lot of that can happen. Is fiscal stimulus. We saw south korea pump a lot of money into their system. Russell i do think japan, i think we will see a package out of japan in the next few months. Here in the United States, what we could do, our debt levels are rising, we could afford some tax cuts or tax reform if we take care of the longerterm problem with entitlement programs, Social Security and medicare. There are solutions, but we have to solve the longterm debt trajectory. Happen andt could that is an avenue for stimulus. David we just saw David Cameron go backandforth with Jeremy Corbyn. What do you think is the right prescription for england . Russell they are going to get some stimulus because of the lower pound. Tourism to london has improved. That is only one area. Business decisions are on hold in the u. K. People are worried about import, export. Alix thank you very much for being here. David this month, bloomberg continues its focus on the world of pharma by gathering prominent leaders to discuss it. Hard to be much slower than they are now. Brexit is not a structural change for the biotechnology or pharmaceutical industries. There will probably be some regulatory implications. Whether or not workers can move freely, we will have to see how this sorts out. It is not a major structural change for our industry. Brexit is not one of them. Difference . Ake any do you really need partners . We value our partners tremendously. We rely on partners are a lot a lot to deal with the complexities. Servingre the longest the year after my journalistic career began. Talk about the structural changes. What do you see as the big thing happening at the moment . Good and some of challenges. On the positive side, the pace of it the advance of science is spectacular. We can talk about the things that excite us the most, which human genetics. On some of the challenges, they used to be if you struggled really hard and were the lucky ones and had that you are able to spend 2 billion and if the doctor thought it was safe and effective, they could write a prescription and the patient to go to the drugstore and get your drug. That world does not exist anymore. There are whole new interface you have to deal with that the people managing the pharmacy benefits for insurance plans. That has changed the world a lot. In a bishop and eight beneficial way or in a beneficial way or a bad way . I still think everybody is working for the benefit of the patient. That is the way we approach things. I like to think that everybody is doing their part. I must say, i worry about that. Our cholesterol lowering drug is a pretty good example. Here is a breakthrough drug, whocated to treat people cannot get their cholesterol under control, you would think most people doctors would know who needs it. Aboutem is, about 85 of prescriptions written by doctors are rejected. They say they are not covered. Is in price a problem with that isnt price a problem with that . 15,000 a shot is that the problem . Matters, of course. We have to debunk the notion that the list price is what people pay. That is what the media quotes. You, that is not what the people buying the drugs are paying for it. Lots of rebates that are substantial. I do think price matters. On the other hand, some , 100 billion class. What is stopping it . It was never going to be 100 billion. That was a mantra that got put out there. And now when it is a lot less, they can look like heroes. They are trying to control the cost and there are industry , and if you think about it, this is an industry that has , provided vaccines for millions of and millions of children and people around the world. It has helped turn Heart Disease into less of the killer. Ifes people who are blind you do not have legal vision, you can get vision back. Satisfaction of being able to do that. Industry that does all that is now the most hated industry. Why is that . Do you think that is because youve got the money . Whoever is the next president will have to look for cash Going Forward. That is an obvious area. Even Hillary Clinton, who i know you support. She is my neighbor. I do like hillary. Do you discuss drug prices over the hedge . We have this conundrum. We have to have drug pricing that makes people feel they get value. It does not do us any good if all these new drugs are invented and people cannot afford to get them. On the other hand, we do have to have prices that encourage investment in the industry. Capital flows to where it can make money. If it does not think it can make money in the biopharmaceutical industry, it will not be here. All of the young entrepreneurs who want to cure cancer or alzheimers, they will not do it. Sufficient incentives to make this girl. The patent system, i love the quote president lincoln said the patent system provides the fuel of interest to the fire of genius. It is a wonderful quote. It explains why in the United States, most of the drugs in the world are not invented in the continent. They are invented in the good old United States. Why is that . We have a system that encourages it. Element there is a view that it is in the politicians hands. What is the thing you worry about . Elementsk there are that you see already, to go after the evildoers in the pharmaceutical industry and there are evildoers. We have seen some people do some stupid things. That becomes an easy way for people to pile on. If you make the enemy the biopharmaceutical industry, when we are not the enemy. We are really the solution to so Many Health Care problems. , at times when you have to close down on budgets, we will lose the longterm incentive and the u. S. Will no longer be the place that invents most of the drugs. You have had quite a long. Ofinnovation love period innovation. Are you happy with how it has gone . I love the fda. If you are a powerful marketing company, what do you want . A very low bar you can easily get over and put the marketing machine behind your products. If you are an innovator, you want a high bar because you want the fda to only let things that are safe and effective and well proven so that when you get over there, that is your protection. We have no problem with the fda. When we interact with them, they have precisely the same goal as we do. They want safe and effective drugs out there as quickly as possible. Name in manyng circumstances, trump. Ass industry have any idea how that might look . I do not think we have bothered to look at that yet. It worries me. You talked about this range of drugs coming through. Ne is cancer immunotherapy is that a case of you have one of them, there is another 34. Is that too Many Companies chasing the same thing . This is a little different. Somebody comes up with the noon way to treat comes up with a new way to treat ulcers. And there are 10 others. In this space, it is little different. It is not going to be the standalone solution to all cancers. Lots and lots of work to do. It is like the foundation. If you want to be in this business coming up with drugs to treat cancer, we cannot afford to pile on 100,000 drug on top of 100000 drug on top 100,000 drug. If you are serious about this, you need a foundational product, which you will want to combine and hopefully you can combine it in an economic way and you want to get the right combinations. Was regeneron founder. Farmer, coverage on visit bloomberg. Com pharma. Up bythe s p futures about 15 points. We want to send it over to julie hyman. Qatar airways coming out and potentially considering raising its stake in iag, the owner of british airways. Currently, the stake is 15 . It is considering raising it to 20 . What is interesting is that iag is still lower. It did take a leg higher, but still lower on the session by about 1 . For the reason, we can look to the bombing and the attack in turkey. Iag is down. Thomas cook is another, down more than 2. 5 . That is overshadowing any potential increase stake coming from qatar airwaves. Airways. If italy does go ahead to recapitalize, italy asked for a waiver from the eu on that point. Unicredit, it took a leg downward on this. It sold off a little bit on these headlines coming out about german opposition. Jon fascinating story. Lets continue the conversation. What key banks are looking at. Great to have you with us on the program. Vote draghi says a brexit could cut your of gdp. How one earth euro gdp . Monitor whatdo you the impact will be . Delays,tainty leads to delays in hiring. We are slightly less optimistic about the size of the impact on the economy. Jon is there any way to upset this . Isb is said to reach said to be in no hurry. Whose job is it to step in and tried to insulate the eurozone economy from the spillover effects . You would have thought it would be governance. That is what they are trying to do through the European Council discussions. The ecb has tried to do what it can. By september, there will probably be lengthening the qe problem qe program. There is no great indication to suggest the july 21 meeting. They are focusing on quarterly policy announcements. In september, we will see more policy easing. Ultimately, it is down to governments trying to kickstart the investment cycle. Jon thank you very much for joining us. Slightly more pessimistic than mario draghi. That was your morning meeting. We can head over to brussels now. By them joined chancellor of austria. He is joined he is joining us now for his first ever interview with bloomberg. You are in the room, how concerned are you and the other eu leaders that we could see a domino effect . Other countries still in the European Union choosing to follow the uks path. Im quite sure there will be no domino effect. Big mess, enormous damage, i do not believe Great Britain will become a role model. Do you think people care about the economic chaos that has been created or they were voting out of emotion . And austria are you a bit concerned you could have a referendum in your own country . You might be right. Draghi explaining the consequences for gdp and economic growth. It is an enormous effect and we have to fight against the consequences and make clear that this will cost jobs. Issue andn is a big my intention is for the next summit, we will come down to a more tangible ryan there could be some wiggle room . Thatard David Cameron say if the European Union wants a close economic relationship with the u. K. , it will have to give some ground on the issue of Free Movement of labor. You think that is appropriate to introduce some restrictions on the movement of labor . Acceptance ofhe Free Movement of labor is a prerequisite and Great Britain will have to accept it. I do not think we should have any restrictions regarding these basic freedoms. Ryan mario draghi talking about half a percent of gdp getting cut off. Concerns about fx wars. We have to be concerned. There are some important issues that should be on the agenda. Ryan we will have to leave it there. Jon great work, thank you very much. Brexit, raising the stakes for foreign banks and the fed stress test. This is bloomberg. Jon from editor David Cameron on what britains next move is circle january 31, 2018, the market say that is the earliest the fed will hike rates. Global equities gain for the second day and the dollar weakens on the speculation of the damage from brexit. David just under 30 minutes away from the opening bell in new york, this is bloomberg go, i am david weston with alix steel in new york and Jonathan Ferro in london. Those markets are going all over the place. Jon a couple of days of stability. The Global Financial scorecard, futures on a firmer footing, s p 500, 29 minutes 30 seconds away from the open, up 15 points, three quarters of 1 . In london, a decent rally, up 2. 27 . There is a play in there, we will talk about that later, thanks scott getting trusting. Other asset classes, risk on, dollar soft, pound strong, 13470 is how we trade on cable. Yields unchanged. Dramatically low historically at 1. 47 on a u. S. 10 year. Around the world to check in with reporters, julie hyman in new york. Abigail doolittle at the nasdaq and mark barton in london. Julie, futures higher. Julie breaking news on general , it has, a big victory won Regulatory Approval to shed its too big to fail designation , important financial institution, ucb shares climbing higher in early trading. This is the first time a company has been granted former release by the Financial Stability Oversight Council, they said wednesday in a statement, this have to do with the prior ge too bigdesignation as to fail, ge capital has made fundamental strategic changes that have resulted in the Company Significantly smaller and more stable funding, that comment coming from the treasure treasury secretary who has the Oversight Council coming he says after a review and engagement with the company the council determined that based on the changes, the designation is no longer warranted. That frees decoupling from some of the Capital Requirements that are put a pirated desk put upon it. Put upon it, ge shares trading higher after winning approval to drop the too big to fail designation for General Electric. Other movers, monsanto one of them, shares earlier lower after earnings and sales miss but they said it is seeking alternatives, talking to alternative parties to the did it got from buyer that was 100 22 per share, monsanto rejected that as too low. Canadian talk about, a Imperial Bank of commerce chicagobasedy a commercial bank for 3. 8 billion, private banks trading higher by 24 . , they were outke with its numbers after the close of trading yesterday, it is higher, i am surprised, down 7 in late trading yesterday the stock after its futures orders up 11 , analysts anticipating a 13 gain. What are you seeing at the nasdaq . Lots of movers in the premarket and all in the health care, shares of the biotech moreny are surging, up than 70 in the premarket, set for the best day er after the company said is Ovarian Cancer drug met the primary endpoint in a final phase study. A will be filing a new drug application in the Fourth Quarter, competitor Clovis Oncology is trading higher, it is worth noting that on both high bear a very shortage of 25 percentage on both of these stocks, some of its strength today could be a short. Faring less well in the premarket, for the long comment experience therapeutic, shares down more than 30 in the premarket after the Company Given up that yesterday saying that his experimental cholesterol drug is unlikely to gain fda approval. We do have at least two downgrades, shares already down about 27 this year, a very rough 2016 for experience there a few decks. Lets head to europe. The stoxx 600 was on a twoday loss at 10. 8 , a fourday loss is a mere 6. 4 ,. He kleins post brexit declines post brexit, every signal Industry Group falling today, banks rising but the italian lenders are falling. Look at the decline on the bank index, germany opposing any attempt to shield investors from losses as italy begins the Bank Recapitalization plan. Mulling over this 40 billion euro plan to inject into italys lenders which need for us capitol. This is the pound index, the Second Quarter, the biggest decline on a quarterly basis since postlehman, the Fourth Quarter of 2008, then the 18 was a steady one 80 klein was a steady one. The 18 decline was a steady one. I love this chart showing how the pound is moving all sorts of markets. Not just currencies. This is the correlation between pound euro and the euro stoxx 50 and the correlation guide is the before 1999. Since before the onset of the single currency. Strange movements out there. Alix check out the pound peso. Thathree big stories matter to markets now, global stocks rallying for a second day since the brexit about, traders are looking brexit though, not a fed rate hike since 2018 and the pboc to support the offshore u. N. Markets. With us to break it down is jonathan dollars, we have to start with the valid rally, s p futures having their best rally since february, everyone was concerned about was that the brexit would create this massive global unwind that the Global Economy would collapse, all these issues, it appears that this may be a headwind to create stability but the world has not fallen apart. If you look at the decks, important, volatility below the longterm average, i think we have more upside in this recovery. This is what i was going to ask you about, august, it it was much more to most was in the markets to bed now, what is going on . Issuelike brexit is a big strategically for europe and u. K. , therefore the world, why havent the markets reacted more violently . February, the markets often u. S. More, we were concerned about recession, when you put it on a scale of things, the damage that happens from a usled global recession is far worse than this issue. What is concerning people, correctly, it creates a contagion which creates a breakup of the euro itself and that is a much bigger deal than simply the u. K. Leaving a common union. Times over the last few there has been a people in the markets, is in the common denominator china, august, china, even in january and february, a lot of concern about china, is what were learning that china drives a lot more the Global Economy then the u. K. Than the u. K. . I do not think though, when you have a Global Economy growing at 45 of historical average, you get all kinds of unexpected consequences. One of them is you end up with a pick up in nationalist sentiment , it causes these types of things. You lose a little bit of control of the situation. As i think we will get a bounce, the underlying growth in the World Economy is weaker in europe. David the timing of the fed rate hike, traders are pricing in a greater possibility we will see a rate cut this year. In fact, markets at the u. S. Central bank will not increase rate since 2018, the markets have been more right than the fed in the past, do you believe what the markets are telling us now . I hope the markets are wrong ,o if we have a cut this year this thing has gone terribly wrong. Weaker than we all are expecting. David we show this earlier, it shows what the this is september. This was originally the purple line was a hike, now gone down to zero. The blue is Holding Steady and the white line is a cut, spiked up a bit. If i were a traitor, which side what i the, the odds are not zero that there is a hike. What side would id, the arts are not zero. Retirees cannot make it on their savings and that means they have to save more money and that is bad for the economy. It cuts down on consumption. You cannot have a vibrant economy without a vibrant banking sector, if you have zero Interest Rates, banks close in on themselves, a reason why, look at what the european banks have done over 20 and u. S. Banks getting walloped. The key stories, zero Interest Rate policy is a really take problem and if people think that Central Banks pushing rates below zero further is a solution, i think they will be very surprised on the downside. Jon we found that anyone trying to increase rates found it difficult, since 2008, every signal major bank that is tried it had to reverse course, sweden and the eurozone, ecb, to Central Banks i can think of, what is the difference . A couple of stories. The first is, if the fed moves independent of everyone else, then the dollar get strong and that hurts the u. S. In terms of the competitiveness of our product. The fed it is hard for them to have a sustained tightening, not more not one more move, if the rest of the world is easing, that is difficult. On the other hand, in the u. S. , unemployment under 5 , core cpi, core inflation is over 2 . It does not justify the kind of rate environment we have. Yes, some instability, a lot, the fed will not move in the face of that, but in 3, 4, six months, chances are we are looking at a world which looks a lot more back to normal that it feels at the moment. Jon what is the equilibrium rate . That is around its mandate, that does not mean they does that, what change in the next couple of months . And the long run, over the next 20, 30 years economic output is actually been a better indicator of where Interest Rates should be. I do not know whether rates should be at 2 or 1. 5 or 3 , but close to zero does not make sense. I think Central Banks are petrified of toppling this by raising rates but the reality is that rates, when zero and below is a real drag on global, normal behavior and that should be a concern for everyone, not a victory lap. Jon our third story is connected to our second story, chinese officials intervening to support the offshore u. N. , according to those with knowledge of the matter, they want to keep the currency stable. Is over to you the last couple of years, with the assumption that the world needed a stronger dollar, the eurozone needed a stronger dollar and japan needed a stronger dollar, in the last six months we found out that it will be very damaging because what will happen in china, are we seeing that again, a repeat of that, those fears from january and last august are the back again . I am a free market guy and when i hear about china intervening to manage their currency it always makes me very uncomfortable. We have also seen this story from china that every time they say they want to move to a marketbased consumer led economy, and the second that it starts to weaken a little bit during that transition they intervene in the markets, they prop up their stock market and puts extra credit in the system and boost industrial output. They are talking out of both sides of their mouth. To a large extent, sometimes the best Economic Policy is to lead the markets determine what their currency is worth even if in the near term that causes a little bit of pain. David those are the stories that matter to markets, coming up, deal in todays environment, could we steal still see megadeals in the market, and later, a interview with the blackrock ceo. Alix two stocks well watching rge and diamond resorts are ge and diamond resorts, General Electric finally dropping is basic nation as being too big to , that label that it had had trying to get rid of, it sold nearly all of its lending iness is, unexpected but it was expected i should say but a positive thing for General Electric. Bymond resorts being bought apollo for 30. 25 per share, 2. 2 billion, 26 premium, a Timeshare Company and that stock surging in premarket trading. , the deals, are they back, will they continue, this is a big one. Focus, myutures in recovering most of the previous sessions losses , a huge run over the past few days, lets look to our chief market strategist. My concern is that the buyers of gold are going to get out at any time. What do you think . Psychologically things have not stabilized but the markets have, the fix has fall from 27monday to below 18, a 30 ,rop, less concern numerically but we have not seen a new burst in gold, thursdays highs at 13 six 1360 has held even note new lows this week, that did not cause an extended surge and some profit yesterday about 1300 is an important level to keep an eye on. Alix the most inflows, that annealing 2000 an ounce a few years ago, yet gold way below that level, which one has to rerate, prices . That is a function of the Investment Choices with trading etfs, that is reflection. Looking at gold, i possibly see more upside but the key is the dollar, no rate hike will have this year, that will keep the dollar from rising and that could keep the gold a positive tone, we have been trading between 1200 and 39 or a good time before the recent breakout comedy target is 1400, the midpoint of the alltime high you talked about to the low at 1100. That, what get below kind of downside would you see . Looking at that on a weekly basis, the markets will fluctuate, you will get movement, keys from last week, even though the market may hit lows, we did not see new lows in the Euro Currency and we did not see new highs in treasuries, those are both positive sides signs we are seeing stability, gold, that might be over in the near term, in the longterm, it will remain stable 1250 is the level to keep an eye on as a support level, the midpoint of the channel we traded from february to may. Alix gold up by about five dollars. ,till ahead, shrinking deals after a failed merger with pfizer, the allergan ceo saying it is eyeing smaller targets, the interview next. David bloomberg is focusing on pharma by discussing the industry, after allergens 160 billion merger and merger with pfizer, the company is eyeing smaller deals, their ceo and president spoke to us about the companies strategy. Looking at buying intellectual property, rmb assets and m a, with respect to m a, looking at smaller scale talk in dales deals that support our leadership and innovation. Pick up on what he said, i have more about these i hear more about these tight in dales top in deals, is this away from the large deals . Some specific issues to health care which is driven a huge part of the m a volume, at thethose megadeals beginning of this year, we saw, when concerns about going into a recession which were false, that m a activity took a major step down and just beginning to ramp up in the back half of the year, and my dear is in the next couple of months, we will see quiet, especially on global deals until we get through some of this noise. David we also have a president ial election. We do not know who will be in charge. Increasing de la torre push back whether antitrust or competition authorities in europe or the treasury coming up with new rules on inversion with grow pharmaceutical deals. Is there a limit regulators are putting on the big deals . Not sure if there is a specific limit, the number one thing is, if you have an economy that looks like it is nonrecessionary, clarity on the point you were making on the general Regulatory Environment which is very muddy and become muddier with what just happened. That possibly put a damper on things but at the end of the day, Companies Want to spend things out, do acquisitions, they need capital to run businesses, there is a huge pipeline of pentup demand for activity. There needs to be a time of calm, we were there before brexit. Maybe that gets pushed back until the fall is my guess. Apollo buying diamond resorts, they have put in so much money, particularly in energy but they had not deployed that come at what point do you think we get that a lot of money coming into the market . We were talking about the fed raising Interest Rates. You want things to feel normal, 1. 4 10 year yield year yield, feels distressed but the fix down close to 17, if we see things calmed down, that is what we are we are going. I think that the angst goes away and we do start to see a better environment for transactions. The angst is not going away in europe and england. And the u. S. Market, we are 4 , if you include dividends, 3 or 4 from alltime highs, we are so insulated. You are staying with us, for full coverage of pharma visit our website. Up hank you your next thank you. Futures are positive, the global rallies. Jon from london and in new york, it is bloomberg, lets get you up to speed, a couple of seconds away from the cache open in new york city, futures positive, s p 500 futures of three quarters of 1 , in london, the rally continues with two Percentage Points over that on the session, the index the want to watch. Watch i tell you financials. I tell you financials. Italian financials. The softer dollar the story, cable up to 134. 0 81. Yields unchanged. An interesting story. Treasury yields stick at 1. 47 on a 10 year. Deputy i crude up. Wti crude up. Julie . Julie the rally continues this morning after the biggest oneday gain in about six weeks yesterday for u. S. Stocks, an extension of that today, 8 10 of 1 for the nasdaq and the s p, 7 10 on the dow. Some strategist saying be brexit related selling is already potentially done. At least in the United States. Interesting to see how that plays out over the next few newsons and as we get more out of the u. K. And the eu in the coming weeks. Individual stocks, big news, General Electric has one dismissal of its to big to fail status. According to the Financial Stability overnight council, shares of 2 on this win 40 what a hardfought win because it has been winding down ge capital for years, making it smaller. Revenue at this segment for General Electric, here is what ge capital look like in 2007, in the mid to late to thousands, a huge proportion of revenue at General Electric. It has shrunk and shrunk and reconcentrated on what had been its legacy business. A fascinating transformation over the last several years. ,lsewhere, a deal to talk about diamond resorts up 24 after the timeshare owner said it was being bought by apollo for 30. 25 a share in cash, the premium the premium 26 , the total value is 2. 2 billion. Over atacle, upgraded j. P. Morgan to neutral, it had been at underweight, the price at 38, analyst saying the stock is underperformed recently, that is likely to subside and that is one of the reasons behind the upgrade. Head scratch earlier this morning, plunged after earnings last night after futures orders came in below what analysts had been estimating, the shares have turned higher this morning, some analysts say they are encouraged for price here channels are clean, and inventory backup is in lowerpriced items which she finds to be reassuring. Jon fantastic, thank you for breaking that down. Just got some leaders putting out a summit statement, eu leaders on informal meetings in brussels, bring you the quote in a moment, we deeply regret the outcome it of the recommended does referendum in u. K. That we until the u. K. Leaves the eu, eu law applies and within the u. K. , both when it comes to rights and obligations. An interesting situation where things have changed drastically politically but in terms of law, things have not changed at all. We are waiting for it to change, we do not low we do not know how long we will have to wait. David exactly. Just listening to David Cameron and Angela Merkel on the other hand, you get a difference about how quickly this should move forward, Angela Merkel sank we will not talk you until you get going and we wanted right away, David Cameron saying there is no rush. We can have discussions even if they are not negotiations. Those discussions, not imminent, part of the reason we are helping stocks, the dow and s p erasing losses for the year, the nasdaq off i percent for the year but the other equity markets in the u. S. Getting a boost. Banks, a big hit earlier in the week but u. S. Bank stops stocks bouncing back after the brexit and the stress test round to after the closing bell today. For more on the fallout, Chris Kotowski from oppenheimer joins us from the new york offices. I want to read you something bernstein said about european banks, calling barclays almost almost uninvestable, if european banks are that, with what are u. S. Banks . Chris i do not think there uninvestable, if you think about the direct impact and the indirect impact of what happened in brexit, i can think of five kind of direct impacts that you will see, they will add up to pressure on the earnings, more blah but nothing cataclysmic. The first thing to consider is the immediate risk off trade. I would doubt that any bank was caught on the wrong side of that , i bet you they all came into this flat. The next thing equity Capital Markets is likely to come down with the risk off trade, i know we are bouncing back today, a big risk off trade, reasonable to expect equity Capital Markets to slow down. Third, after this big flurry of events, you will expect to see fixed income trading slowdown. I bet august and september are going to be very slow. As everybody waits to see what happens. M a in europe will start slowing down fairly radically. That will impact not so much third and Fourth Quarter earnings but early next year. Is itst direct impact makes any rate increases probable. No rebound in net interest margins. The impact is blah. Jonathan, would you buy u. S. Banks . Yes, when the markets rebounded, Interest Rates are not bouncing back, we saw the exact same thing in february that when Interest Rates fell, when the market got concerned and the market recovered, and you did not have the same thing in the banking sector. That with Interest Rates as low as they are and the economy as weak as it is, not a great operating environment for the banks. It is much more so in europe than the u. S. David one of the things that drives equity prices it in the bank is how much capital they can return to shareholders, the tech a wave of the stress test this afternoon, what do you expect out of that . Chris the two companies it will be interesting for, bank of america and citibank, the only two banks that were remaining in the penalty box. Everybody else was returning 70, 80 percent of their earnings already. Flat,earnings are kind of stable, not growing or shrinking , they will probably continue to return 70 or 80 . They have been rehabilitating themselves, a couple of years ago they failed the stress test, both in 2013 and 2014 they got the return about 1. 2 billion, last year they returned about 6 billion on an annualized rate. 1415 andearning at generating 2 billion or 3 billion of regulatory capital than that. Is generating 16 billion 70 billion dollars, 80 million of rate return capital, lester only return 6 billion, interesting to see if they can get that up to 9 billion or 10 billion on the way to being a normal bank. Thank you. Chris kotowski and john, you are still with us, what is the number one place either hedge against risk or take advantage of rebound . A if we look at this, not on bounce but over the next year or two, stocks have to win, companies that can grow in environments where there is lack of economic vibrancy and continued uncertainty, they will get a bid and many of those companies are expensive, Consumer Staples and big pharma, business services, the thing they represent is they do not need the economy to do well in order to deliver Earnings Growth , and that is where the market will be focused. David where is earning growth going to come from in the second half . Before brexit people were saying a good secondhalf in earnings, is that still because is that still the case . We have easy comps. Like the end of this year and the beginning of next year look good because oil trough in the beginning of this year and it looks easier, we have a lousy First Quarter for banks, a year for now it will look better but we are probably in a low singledigit earnings environment and it is not a disaster but not particularly healthy and that will be challenging for investors. Are expensive, i bet a lot about Bond Investors becoming Equity Investors because the bond market is way too volatile and they have no problem paying for dividend stability of stables and utilities, does that keep that trade alive longer . Put it in perspective, now coming get more than one point four on a 10 year treasury if you had dividends and buybacks, the s p is yielding almost 5 . That yield will put a lot of people into it and also push stock prices up. A weak earnings environment does not mean a bad stock market environment, that will be interesting how investors digest that. Alix good to see you. Up, the u. K. Wanted to rid themselves of the eu redtape, but would getting rid of regulations help or hurt financial institutions. We will explore the next. David i am david weston. Coming up later, and exquisite interview with blackrock ceo, larry think. An exclusive interview with blackrock ceo, larry fink. Looking at a risk rally underway, the dow up 133 point. Julie hyman is looking at movers, another broken oil the old. Oil deal. Julie this was a long time. Energy transfer partners and , Energy Companies transfer terminating its merger agreement with the company, about 18 months of negotiations between these two parties. The falling price of oil killed it. Here is the different prices, after months of negotiations this deal with was about 33 billion, announced at the end of september, then oil cap going down. A lot of questions about whether the deal would get done and both parties negotiating to potentially get out of it. And thate judge ruled paved the way for it to be terminated. How the stocks are trading today, the actions, this is something that had the big reaction on monday, postfriday when the decision was made. Williams is little changed. On a potential deal front, medivation, the biotech company, watching this, this company is still a takeout target for Global Pharmaceutical Companies even though it has been spurning their advances. Says pfizer,e amgen, and astrazeneca as potential bidders. That webiotech company are watching, they plan to file a new drug application for a medication to treat Ovarian Cancer after successful results in a trial, it makes a competing a company that makes a competing drug is rising, doubling. David that get your attention. Alix a mover. Lets go to Abigail Doolittle live at the nasdaq on what is moving in early trading, the best today rally for the nasdaq, at one point the best since february. A huge rally after the big upxit sellout, the nasdaq 1 , being helped by the Big Technology names, including microsoft, apple, and amazon, the question is whether or not this relief rally is for real. What israel, Advanced Micro Devices back from the graveyard in 2016, shares up 80 this year, higher today on news they are acquiring a gaming technologies developer, laying the groundwork for the future. Another big tech winner at the nasdaq, seagate technology, shares higher by 2. 9 . Theompany could have the Second Quarter on the upside. He is basing this on channel checks, a lukewarm call considering they have not upgraded shares, still at a sector perform or neutral. David thank you. ,fter thursdays brexit vote bank bosses from jp morgan to jamie dimon to Credit Suisse try to calm their u. K. Employee means employs about u. K. Jobs shifting out of the country, they said they would wait until they see how the u. K. Negotiation worked out for the brexit. Take us through how this works for a company such as a large bank, what are the possible ramifications of brexit for the loyees of banks in london big banks in london . People do not know yet because there is uncertainty. The comet comment that they will wait and see about negotiations is key. We will still be part of the eu until our exit negotiations come to an end. They have not been triggered. People have been talking about article 50, that can take up to two years and it will not be triggered until the end of the year. Maybe even next year. Laws. Part of the eu Company Still have to apply all the eu laws already in force and the new laws coming through. They still have to work to apply those. For the time being, we have all access to eu markets that we had before the brexit vote. A lot of the comments from politicians and from banks, saying that we need to try to keep the u. K. For Financial Services that comes under eu directives. David that is what i wanted to ask you, the passport, the eu ministers have said the law remains the same for now but explain what this passport is and what it would mean for people who lost the passport . The passport is an ability for a country with a firm established within the eu member , subject to regulation in that state to offer its Financial Services all across the eu Member States without having to seek licensing in any other country. If a u. K. Lost that, it would mean that banks in the u. K. Would have to seek licensing within the eu to offer their Services Within the eu. The idea of having the euro clearing houses in the eurozone, we had this argument last year, the eurozone lost thatin, the argument was as a member of the eu, we should not be discriminated against because we are not a member of the eurozone, if i remember eurozone did not have the institutional strength to oversee the euro clearinghouses that would come from over from london, how does this play out in the course it goes back to court . We will not know fully the outcome of. Say we go for the ea model like norway, we would still be outside of the eu and the eu could still run an argument that it would want to keep the eurozone clearing. ,on a partner of mayer brown you go around these companies and have an idea of how long these things take because you have to give that, how long will it take, a rough idea, how long does Something Like this take to resolve as a lawyer . This situation now, the legal situation in the city, five years . At the risk of sounding unhelpful, it is uncertain because we may find that we go for the norwegian model which Means Nothing needs to change. Even if we do not go for the norwegian model, the new year directives have closet passports the new eu directives have partial passport, you can still offer some of the services across, things may not have to change. In terms of how long does it take and how much would it cost to adapt things you may not have to adapt anything, you may only have to adapt part of your business like a Retail Business and not your also business. David and not your wholesale business. David how risky is it for a bank to try to seek regulatory and individual jurisdictions and what it means the large banks would be better off we looking out of london and going elsewhere . It would not need to set up in each of these jurisdictions. It would only need to choose one new jurisdiction to set up. I want youet up and jurisdiction a capacity or across all of the others. Cumbersome itw is, even though you are only dealing with one eu member state, you are talking about, assuming you have not already got something in the eu, setting up a business, getting employees, recruiting, persuading your stocks. Your staff. What are the regulators like, are they used to your particular market. Do they have the infrastructure to support your business . A lot of questions that mean it is not as simple to say we will move across the channel, and given that there are a number of models under which we might keep and ability to crossborder trade, it is something that banks do not need to necessarily take a kneejerk reaction to. David last question, labor laws, i spoke with a senior official of a u. S. Major bank and their Immediate Reaction was we would never moved to frankfurt or paris because the labor laws, we would go to dublin, are your clients saying that, we need to take in to account labor law restrictions . They will need to take into issues,a panoply of labor laws are definitely one of them. The resilience and the sophistication of the regulator in that country is another. Definitely. Partner ink you, a the law firm of mayer brown based in london. Upa great interview, coming later, two interviews on bloomberg television, 12 30 p. M. Eastern, blackrock Ceo Larry Fink joins us and Carlyle Group rubenstein, you will only see them here on bloomberg, cannot wait for those discussions. York,rom london and new this is bloomberg, about 25 minutes from the u. S. Equity markets trading session. Global markets, s p 500 up one full percent on the session so far, the dax on a firmer footing, over 1. 5 of the italian banks underperforming. Dollar, softer, cable, firmer. Up 111. Lar, treasuries, not participating in the risk on rally, unchanged at 1. 46 on a u. S. 10 year. Underneath the surface, a fascinating session alix definitely watch u. S. Yields. On market for today, Erik Schatzker in an interview with blackrock Ceo Larry Fink and the coceo of carlisle, this is bloomberg. Amnie from new york, i vonnie quinn. Mark and i am mark barton. This is Bloomberg Markets on bloomberg television. Vonnie we are going to take you from new york to stumble in the next hour. Here is what we are watching. Turkey is on pilot after three suspected Islamic State suicide bombers killed 41 people at least an injured more than 200 at one of its busiest airports. We are live in istanbul. Rallyglobal equities continues for another day making up for massive losses after the respite vote brexit vote but a recent poll shows fears that are a recession in the uks likely. Vonnie and the north american summit. How did brexit vote will affected