Transcripts For BLOOMBERG Bloomberg Surveillance 20160705

In london with tom keene in new york. The pound dropping to a 31 year low and we are back at levels we saw post brexit. Workwe begin the fourday week after your one Day Work Week yesterday. Arkets really moving yesterday the italian banks are front and center, arent they . Francine they are important because there is a feeling among certain investors this could be one thing that breaks the eurozone, not brexit but the fact the italian banks cannot find a solution. Lets get straight to the bloomberg first word news. Nejra in the u. K. The conservative party takes the next step toward electing the next Prime Minister. All 330 Parliament Party members will vote on one of five contenders. Energy minister Andrea Leadsom is in the lead. Grassroots conservatives will pick the leader once the field has been whittled down. Been rocked bys three terrorist attacks in one day. A suicide bomber blew himself up near the prophet mosque. Five security people were killed , and there was another attack near a shiite mosque and one near the u. S. Consulate. The death toll has risen from the deadly truck bombing. At least 157 people were killed and almost 200 wounded. Islamic state claimed responsibility in the most deadly attack in iraq in more than a decade. Prime minister mark in turn so is billt ill shortens labor operation. A have just started to count more than a million mailed ballots. Leadry clintons national against donald trump has narrowed accord to the desk according to the usa today. She leads 4640. A dayly as 24 hours powered by more than 2600 journalists and analysts in more than 120 countries. Tom thank you so much. Equities, bonds, currencies, commodities, a big jobs report on friday but nobody really cares. Futures 14 right now. A record low on the 10 year yield. The euro not part of the story. Yen removed as well. Where are we in the equity markets . Up at least through friday on the down your 18,000. Ever 10 spread shows the flattening curve in the United States as well as germany. Francine this is a picture of european stocks extending nose into a second day after the rally had lifted them by the most since february. The main story is the pound dropping to a 31 year low. Selloff is resuming and we are seeing a lot of the havens. Mark carney giving a News Conference in about an hour. Tom here is what is not happening. Sometimes that is more important than what is happening. Yen is not as strong as you think. I call it the kuroda chart, bank of japan option, a weaker yen, abenomics did not happen. We are right now making new, stronger yen. We are not through the intraday strength and we are getting this down 100 level, when a 1. 73. 101. 73. The yen francine this is a little bit like the vix index but a little bit different. It is the skew index. Traders andhow much option markets are willing to pay to protect against rare but extreme events. This is the week of the 28th of june, basically right after brexit, and it rose to the highest since the 1990s. If you look at average prices in june they are the highest on record. The market has come down a touch that is the week of the 28th. Sterling just led to its weakest in 31 years. Lets discuss these moves with come all sharma, the bank of. Merica come all sharma it seems that there are something the markets are anxious about, we do not have a plan b. Kamal if you look at the breadth of news we have had over the past 24 hours, the pmi number was not as weak. The anecdotes suggest that Consumer Confidence was very weak following the referendum and Manufacturing Confidence was very weak, and we also have the news on Standard Life this morning. We are starting to see the pervasive impact of the Eu Referendum starting to hit. Francine what happens to the pound . Kamal i think it is going lower. 1. 25ongerterm target is but we certainly see the risks are that we get that sooner rather than later. Tom lets bring up the 15 day chart. This is not a dynamic chart but is most interesting to show how we came back off the bottom of the drama we saw on the 23rd and 24th, and we have rolled over again. You know you never see it coming. The elephant in the room are the italian banks. What else are you looking at to be that exogenous shock that makes things unravel . I like how you mentioned Standard Lifes property real estate run. Think the key from a u. K. Perspective is the financing of the current account deficit. About 6. 5 and that ultimately needs to be financed. There is more supply of pounds than demand. That, weooking beyond have been looking at the political event which we think is surrounding the european economy over the next year or so. We have the french and german elections coming up next year and the dutch elections. We also have the Australian Election which could be an important focus as well as the italian referendum. Timeline is different than the urgency this morning before Governor Carney speaks. When you look at your team, ethan harris and all, what is that thing you are looking at within europe . Is it the german 10 year going down to new negative yields . Lt in the u. K. S . The pound is attracting a lot of psychological market interest at the moment. The data is going to be very important. Salese weekly john lewis coming out. That would be another nearterm anecdotal story as to whether the u. K. Economy is starting to turn over in terms of Consumer Confidence. Looking broader, it is going to be this steady flow of information from the markets regarding investment plans and decisions and portfolios. The japanese payments numbers are coming down from thursday. Overall, is there anything mark carney can announce to avoid a recession or soften the blow . Kamal we think there is going to be a recession. Evidencet ignore the that is mounting that the data is starting to turn over and demand is starting to weaken. I think it is a matter of how deep that recession will be. Tom bring up the current account deficit. This is the chart we have shown before. This is simply the longterm chart of goods and services and investment. That white line will drive ever lower. You will see how much of that is investment flows. Now this is how the pros folks look at how what has happened over the past few years. This is the obd currency surface chart and we focus on how much red there is. This was not like this three days ago, this amount of red on the skin suggesting a short sterling is extraordinary. That is an extraordinary worsening if you will of the bet on sterling over the last 72 hours of trading. Kamal we would agree with that. If you look at some of the momentum, there is a lot of bearish sentiment. The question is, is that currently justified in looking at the data . It probably is. 1. 25 could be sooner rather than later. Francine thank you so much. We will be talking about italian banks next. Coming up in the next hour, boe governor or carney set to speak. We will bring you that News Conference live and in full. Francine this is surveillance, tom keene and new york, Francine Lacqua in london. Nejra the Italian Government may inject fresh capital into the countrys thirdlargest bank. It could failrned when stress test results come out at the end of the month. Traders saysop oil prices will not rise much further. Ian taylor spoke to bloomberg tv. Yes, i think stock levels are going to come down but no, i cannot see the market roaring ahead because we have so much oil. Nejra taylor says brent crude will rise to 60 a barrel by the end of next year. It is not a great sign to be a banker in london. Executives and recruiters project that bonuses will be cut by at least 25 . The uks decision to leave the eu has slowed down dealmaking and another round of job cuts is likely in september. Francine thank you so much. This has to do with access to the Single Market and the passporting writes. The conservative party will vote on who will become the next Prime Minister. They will vote on the five contenders and the one receiving the fewest votes will drop out of the race today. Theresa may is the bookmakers favorite. Andrea leadsom topped one survey. Oining us as anna edwards thank you so much for joining us. It heats up today. The process of elimination is basically every time they vote one canada drops. Candidate drops. Anna it is not the public at large voting, it is mps initially. We have five contenders, 330 members of parliament which told the list down to two. Then it is put out to their broader conservative Party Membership and then they get to vote on the final two. We get the first results of the it mightnd at 7 00 but not be until september that we know who may lead the company country. Francine Boris Johnson threw his support behind the energy minister. Anna Andrea Leadsom was seen as an outsider. She has not got as much experience in government as theresa may. She has Financial Services experience. Boris johnson says she has the zap and the drive to lead the party. One of the debates has been the role that eu nationals living in the u. K. Will have and u. K. Nationals living and the rest of europe. Tom we are baffled. We were celebrating the colonies leaving yesterday, i do not know if you are aware of that holiday here in america. Here is on mr. Cameron, the Prime Minister who likes to think of himself as a modernday Winston Churchill had little understanding of historical forces and goes on to say britain has always been at the edge of europe and has led the way in questioning the value of the eu. Each of these candidates is the ey . Which is the most antieu . Anna Andrea Leadsom is certainly seen as the person who is to the right of the party and she was supported by a lot of people from ukip. She is seen as somebody on that side and michael gove led the campaign in a slightly more hope highprofile way but he is fallen out with a lot. Tom is this like a Trump Republican Party polarity or is everyone more on the same page . Anna they are on different pages and starting to find their dividing lines. One is how quickly you trigger an article 50. Andrea leadsom has been saying we need to trigger this sooner rather than later and others are saying to take their time. Bestine this goes to the possible person is to get the best outcome for the u. K. And that means access to the Single Market. Who would be the best person to bridge the divide . Kamal that remains to be seen. As we have seen in previous euro area crisis, there was a meeting of minds somewhere in the middle toward the european side and the greeks had to eventually give way to some of the demands from the eu. It very much depends on the starting position from the british government. They all agreed the u. K. Will leave. Brexit will happen. The question is the timing and terms. Francine i have to say my favorite overheard story is that apparently Alexis Tsipras had to deal with possible grexit last week. At the eu summit he went to David Cameron and said, i cannot believe you did not have a plan b. It is a funny way of seeing it. Of i just wonder if any them will have twitter feeds as entertaining as donald trump. Anna edwards, thank you so much for briefing us. We will continue with mr. Sharma of bank of America Merrill lynch. On Bloomberg Radio, a conversation with Carl Weinberg who has been way out front on the disintegration of the european experiment. From london and new york, this is bloomberg. Francine i am Francine Lacqua in london, tom keene in new york. Oil trading slightly below 50 today but we spoke to the Worlds Largest independent oil Trading House ceo ian taylor. About whether there was Systemic Risk in some of the Trading Houses and where he saw the price of oil going. Expected to be a little bit higher assuming demand continues to increase which i think it will, maybe at a slightly lower rate. I think it will be in the high 50s or early 60s. I always give this trader health warning. That would be at the end of next year, you see 60 oil . Of 2017, i could see 60 oil. Francine it is great to have interviews like that because it gives us a sense of the market. I think there has been a change in focus over the last two or three weeks with the likes of the aussie and kiwi. ,e have been kneejerk selloff but if you look at the g tens fear we have the u. K. Eventually going to go back into its currency so we have positive weg care yielding think the aussie and kiwi remain supportive but over the dollar ofthink it is overvaluation the kiwi and aussie to correct itself. Tom i look at the markets this morning and i look at record lows. Does this signal global recession . China is not going to save the day. Kamal if you look at some of the pm eyes that came out from asia, chinas were not that bad. I think with the market is looking at is for the contagion fallout of what happens to the u. K. Spreading into europe and the rest of the world. If it is more pervasive there are risks that we do not foresee a recession. Backtheless we have pushed particularly from the fed. We are seeing a flatter profile to Interest Rates over the course of the next 18 months. Tom we are going to come back with kamal sharma. The german tenure has broken down to new lows. It is 0. 162 . These are amazing screens, the 10 year u. S. Yield an hour ago, record low yields. From new york and london this is bloomberg surveillance. A tom good morning, everyone. Bloomberg surveillance, from new york and london. We will have Governor Carney for you in the next hour and he is focused on the markets. Market vigilantes are telling him the propers sobriety of his tone for the bank of england. Year,out the german 10 two year, u. S. 10 year, to send spread . There is the joy of brexit off to the left of the chart and here is the run rate of rationalization, and we just rolled over to a 0. 161. It is remarkable how the markets are speaking this morning. Just getting be a we headlines out. They released boe headlines out. Carneye hear from mark and we will bring you that life. Their cyclicalg counter buffers from zero to 0. 1 . Carney mark rmb mark was the adult in the room that kept the markets appeased and help the banks. The capital buffer is to zero from 0. 5 . He is trying to prevent a bank crisis. Sterling rolling over as well, not all that having to do with Governor Carney. Standard life of edinburgh shutdown redemptions from a property fund, a real state fund over the threeday weekend in the United States. That is a back story and on the front story with Bloomberg News is nejra cehic. Nejra it is the first test for the five people who want to succeed David Cameron. Or than 300 conservative Party Members will vote today and the candidate that receives the fewest votes will be dropped from the race. Andrea leadsom finished first in one poll but bookmakers say teresa may is favored. Saudi arabia is the latest targets in a series of terrorist attacks as a suicide bomber kills himself and for security individuals. Two other bombings caused minimal damage. In baghdad, the death toll has gone up from the truck bombing. At least 157 killed and 200 wounded. Islamic state claimed responsibility. Minister hasrime opened a fourday tour of africa. Netanyahu is trying to drum up business for Israeli Companies and will travel to kenya, ethiopia, and rwanda. Angela merkel says a post grexit European Union us be open to the balkan nations. It is assigned she is not giving up on a diplomatic push to stabilize the region. She spoke at a french conference on the balkan. Powered spacecraft entered jupiters orbit. It will spend 20 months circling jupiter and its goal is to explore the gravity and medic field of the planet. Global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. I am nejra cehic. Tom thank you so much. This has been one of the quiet technology. American the first images i saw were absolutely extraordinary, from it being a yellow blob. 40 years ago it was not much different than it was for galileo 500 years ago. It is amazing how far we have come. Francine it is amazing and yet i would say there is a difference between the space race and have a technologically advanced we are. When you look at the political system it has not advanced that much. There is a lot of backstabbing in the u. K. The brexit vote has turned londons future into question. Tech Companies Really thrive post brexit. Us asn manus is joining well as kamal sharma. Thank you so much. Around thewalking square was a billboard saying startups moved to berlin. Are a lot of them looking at berlin because brexit will mean the taxing will go up . Illian i think berlin and think the next pm has a tremendous opportunity. They have a choice, they can either isolate or innovate. I think they need to build more bridges outside of the eu to the u. S. The u. S. Has come on and said, its create a freetrade with you post brexit. Francine how do you innovate . The only thing that Tech Startups want his tax break so this is something George Osborne hinted at yesterday. We do not know if he will be in charge in two months but we need to cut the corporation tax. Is going toody invest into uncertainty, that is for sure. Past due weis is understand what the repercussions will be. They have to establish more, tilting bridges with some lish language countries building bridges with some english language countries. I think they need to create incentive and deregulation and this is the only way you will prompt and stir some technology innovation. A treasureo you have trove you want to spend in the u. K. And is that on hold . Jillian that is definitely on hold. Francine until we have a new Prime Minister or figure out what happens next . Jillian i think eu negotiations will be key. Again, the Prime Minister has a great opportunity and i am hoping they take advantage of it and change the language around technology in the u. K. Now it is perceived as being disruptive. When you talk about disruption in Silicon Valley that means innovation and efficiency but here it means taking away jobs. Why not use technology to create workforces . We have a company and that is what they do, create on demand phlebotomists. We have sarah knows, that is fiction. Really wonderful opportunity. I think people are seeing the doomsday is not what could be e i love your work in Credit Suisse and warner bros. What amazes me is you were an agent at icm which is basically hurting cats and try not to get. Our eyes clawed out explain to me the rulebook of Silicon Valley, one of the great scenes of bloomberg surveillance, is they think they play by a different accounting and measurement rulebook. Is that changing over what we have seen the last six months . I am not quite sure you were talking about overall because in Silicon Valley everything is fast and changing every moment, including obviously the technology. In this case i think there has been a correction and the Financial Markets are now forcing it. The correction actually will be , thes, for the investors valuation of every company. That is going to be a positive because rightfit now the valuations of companies in the u. S. Is absolutely ridiculous and also does not have any hard justification. I think that this might in fact kickstart this correction. I think also the presidency and will have another effect. The extrapolation by fundraising, this extrapolation of value and i guess i could pick on uber as being the one, are we done with the extrapolation to giselle you dollar gives alien dollar llion dollar bills or is it an act . Jillian i would say it is a philosophy. There are very few ipos and i do not think that is going to change. I think these companies are accepting tremendous amounts of global money and that is increasing their valuation. Im not quite sure anything is going to change right away. I think that we definitely have correction both internally as well as externally. I think the Silicon Valley, people do not understand this. The Silicon Valley mentality is to build the biggest Global Business and whatever it is going to take, we will do. Tom i wonder where the profitability is. Jillian manus, thank you very much. Carney will address mr. Before he addresses us. The governor will do that in the next hour. Looking at my screen right now,. He u. S. 10 year, 1. 3750 mark carney with record low yields in our next hour. Francine this is bloomberg surveillance, Francine Lacqua in london, tom keene in new york. We need to focus on italian banks. Down around 75 and the Italian Government is considering injecting the bank with Additional Capital ahead of the stress test results according to a person with knowledge of the plan. Moved totnuzzi has london and with us still is kamal sharma. Thank you so much for joining us. I guess what people are really concerned is that this gets so ugly in italian banks that we see a run on the banks. Elisa we have certainly seen an acceleration and the discussions have become more focused. What we do know is that last week before brexit there was discussions with the European Commission which allow them to us install this extra liquidity line of emergency funds that banks can tap. This should tide them over in these difficult times. Is there the problem are bailing rules. Can the Italian Government work around these or does that mean they may not be able to fully support the banks . Elisa the discussions are centered on how much flexibility italy has and how much string that comes attached with. In particular, which other stakeholders will be on the hook . Is that the junior bondholders, the shareholders . It is the flexibility within those that will be king. Tom you have been way out for years on covering this story. It is a shocking soap opera to me. Take us into these banks. Do they talk to each other . Do the regulators have a dialogue with them . We had the drama with james dimon saying you are buying bear stearns, lets work that out. What are the conversations going on among italian banking leaders . Is the first real crisis that the European Central bank is having. The dynamics are being tested for the first time. In previous times of difficulty it would have been the National Central banks and the bank of italy leading those discussions. Is the European Central bank. Tom i think it is extraordinary to understand what she just said , this is about germans in frankfurt and the bureaucracy helping the italians. This is the beginning of the euro. Here is the good news of italian banking and elisa has been covering this, she sold her bank shares right here. Francine i need to correct you. That is when she started putting out the scoops. Tom what happens next . That is what i cannot get my hands on. In the old days they have merged with another bank. What happens next . The regime has changed, they in roles have been agreed on, and this is probably the first big or test of those rules where they are applied in tivoli for Smaller Banks to incur some losses. It triggered a huge selloff for the last seven months. It is really hard to tell what is going to be driving the negotiations now. Furtherconcern that undermining of confidence in the Banking Sector could threaten the economy further, or is it going to be that we stick with these rules because forcing flexibility is more damaging in the European Union project. Tom could the government fall . Elisa the Italian Government . Tom yes. Elisa there has clearly been quite a strong message that something is being negotiated. We know theres a referendum coming up soon so it may be a little bit early now to discuss that. Francine the problem is that there is an intertwining and there is a referendum in italy on the political since some system. He said he would go if he did not win that referendum so that coupled with the italian banks makes his political banks his political life very complicated. Banks a bigger risk to the eu than brexit . Kamal the markets have we had the greek crisis from 2010 to 2012 and from an fx market perspective, they are waiting until this gets to the final curtain and until then i do not think the market will immediately start training trading. Francine elisa was talking about flexibility with brussels and angela merkel. Will they not want to help out italian banks . Kamal i think what the europeans are trying to do is reinvest europe generally from the brexit contagion. Elisa, thank you so much. You can see her work across all of our Bloomberg News platforms. Kamal sharma will stay with us. Extraordinary news flow this tuesday morning. On Bloomberg Radio later today, it is the perfect time to speak on the most interesting market reactions. This is bloomberg surveillance. Tom good tuesday morning, everyone. Francine lacqua at london, i am tom keene in new york. Record lows in the u. S. 10 year and we just saw a curve flattening below 80 basis points. Absolutely remarkable. Right now to our Bloomberg Business flash. Thea for the first time olympics has an official insect repellent partner. The Rio De Janeiro games has ensurea brand to tourists and competitors that they will be safe from the zika virus. Investment has suspended trading in its 3. 9 billion u. K. Real estate fund. They invest in a mix of prime real estate assets. London values could fall up to 20 within three years of the u. K. Leaving the eu. In the wake of the brexit vote, british confidence has dropped and pessimism about the economy has soared according to a new survey. British firms expect exports to andnk in the next year almost half are pessimistic about the Economic Outlook. Francine this is what were watching for the rest of the week. Later today in washington while we get the latest reading from the factory orders in the u. S. And president obama campaigns with Hillary Clinton for the first time. Tomorrow the fed will publish minutes from the june meeting. Closer to home and closer in time, lets keep the banks,ation on central mark carney giving a conference at the top of the hour. smal sharma, bank of america ethics strategy is with us. He is Standing Firm and ready to act. Kamal i think the key is that carney is to make sure Monetary Policy continues, cut rates, keep liquidity in the economy to keep money flowing through the system. We do not one a situation where the banks are insolvent. That led to a breakdown of the Monetary Policy. Tom where is the u. K. Economy right now . If mervyn king says we have had a one off adjustment in sterling, what is the actual state of the United Kingdom economy . Kamal we think it is pretty downbeat at the moment. We have made significant downward revisions to our 2017 growth estimate. That further or renewed quantitative easing will take place, that policy response is not sign of an economy that is in good health. Tom cam the governor even get to august . He could probably get to august if there is some kind of stability in the political system so it goes back to the earlier conversation, when are we going to get the Prime Minister . It will be like the Market Perception at the end of the day will dictate what mark carney has to do or not. Overall if you are mark carney, what is your key message today . Kamal reassure investors. Important that market looks at carney and believes things are going well, there is a policy response if needed. Francine as a lot of people are saying, he seems to be the one with the most leadership, or carney. Mark carney. Coming up in the next hour we hear from boe governor mark carney. He is set to speak after the release of the Financial Stability report. S is what we know so far the pound at a 31 year low and mark carney said to reassure the market. Tom this morning, sterling sinks. Brexit. Ets recalibrate it italian banks and global slowdown. This hour, mark carney speaks on the United Kingdoms financial and political stability. As we mentioned, italian banks edge ever closer to crisis. Good morning, everyone. This is bloomberg surveillance. Francine, the most important comment by the governor coming up. What will you listen for . Francine i think what the markets listen for is some kind of reinsurance. Some kind of reassurance. , a lot see mark carney of people say he will speak reassurance to the financial market. He will he is just about to start talking. On my immediate right, the governor of the bank of england, mark carney. Carney thank you very much. I would like to outline how the policy committee is dampening shocks come helping households to seize opportunities with the you ks new relationship with europe and the world. The ftcs efforts are part of a watcherpart by giving would plan to identify the risk to Financial Stability and monetary stability and to be straight with the british people about that. Secondly, to build on a series of measures taken over recent years that have increased the resilience of the Financial System. Third, to supplement this core strength with contingency measures implemented in the past few months to a dress immediate risk to Financial Stability. Fourth, to take action to support jobs and growth during april joe of heightened uncertainty during a period of heightened uncertainty. Fpcts meeting in march, the judged that the risks around the referendum where the most significant nearterm domestic risk to Financial Stability. Some of those risks have begun to crystallize, in particular, our concerns that the historically large current account deficit could be vulnerable to shifts in foreign capital and sharp adjustments in sterling appeared to have been born out. Portfolio flows in u. K. Equities and corporate debt appear to have slowed, in sterling experienced its largest twoday fall against the dollar since Exchange Rates were introduced almost half a century ago. Secondly, it is more likely that adjustments in commercial real estate could tighten Credit Conditions for u. K. Businesses. Foreign flows of capital into commercial real estate fell 50 in the First Quarter of 2016. Transaction volumes have fallen further during the second quarter, and share prices of property rates dropped sharply following the referendum. In addition, the number of all herbal households could increase due to a tougher Economic Outlook and a potential tightening of Credit Conditions. In particular, there is growing evidence that uncertainty about the referendum has delayed Major Economic decisions such as business investment, construction, and Housing Market activity. Sterlingsvely, sharp depreciation should provide support to u. K. Exporters, and the sharp fall in guilt yields has meant that corporate borrowing costs fell modestly over the course of the past week. In addition, Financial Markets have managed the volatility around the referendum well and have not added to stress. Of our planart relies on a series of measures taken over years to build financial resilience. The bank of england has consistently strengthened the resilience of the u. K. Financial system over the past seven years. Major u. K. Banks have mays have rates over 130 billion pounds of capital, and their to 13 ofw adds riskweighted assets. All our major banks and Building Societies have passed last years test, a test which included losses twice those incurred during the Global Financial crisis. Recent moves in Financial Markets have borne out this progress. Although lower bank victory prices are consistent with investor concerns over an uncertain Economic Outlook, lowered bank profitability, overall bank funding costs have not increased. Markets are focused on returns, not concerned with resilience. The third part of our plan has a range oflement contingency measures to a dress the immediate risks to Financial Stability. Responding to more intensive supervision by the pra, as well as their own risk assessments, major u. K. Banks now hold more than 600 billion pounds of high quality liquid assets, or around four times the amount before the Global Financial crisis. In addition, eligible counter ies to be positioned in march we pretty announced a series of options around the referendum date, and last week we announced we will continue these weekly auctions until the end of september. The bank of england is also able to divide substantial liquidity in foreign currency if required. We expect institutions to draw on this funding if and when appropriate, just as we expect them to draw on their own resources as needed to support markets and provide credit to the real economy. The fourth part of our plan is to take action to support jobs and growth during april joe of heightened during a period of heightened uncertainty. A revelatory framework is explicitly designed to allow up to half of the capital and all of the liquidity buffers held by banks to be used to absorb shocks in times of stress. This ability to draw on buffers willing courage banks to continue to lend to u. K. Households and businesses, even if times prove challenging. And to reinforce these incentives, the fpc is announcing today that it is reducing the countercyclical buffer on banks u. K. Exposures from half a percent to 0 with immediate effect. This is a major change. It means that three quarters of u. K. Banks, accounting for 90 of the stock of u. K. Lending, will immediately immediately have greater flex ability to supply credit to u. K. Households and firms. Specifically, the fpcs action, immediately reduces the regulatory Capital Buffers by 5. 7 billion pounds, and therefore raises those Banks Capacity to lend to businesses and households by up to 150 billion pounds. For comparison, last year with a fully functioning Banking System and one of the Fastest Growing economies in the g7, total net lending in the u. K. Was just 60 billion pounds. To be clear, this measure only supports domestic banking pra supervisors will ensure that no Bank Increases dividends or distributions to shareholders as a result of this action. Combined with the already strong Balance Sheets of u. K. Banks, todays actions means those u. K. Households and businesses who want to seize viable opportunities in a postreferendum world can be confident that they will be supported by the Financial System. Now, Financial Institutions, like the rest of us, desire certainty to plan for the future. In this regard, it is important to note that the banks liquidity framework is wellestablished. That the fpc finalize the overall capital framework last year and that the bank will continue to steadily implement measures to develop and end this gorge of too big to fail. And end the scourge of too big to fail. Antieu loss ceases to have effect in the u. K. The law is the law and the rules are the rules. U. K. Hassion, the entered a period of uncertainty and significant economic adjustment. The efforts of the bank of england will not be able to fully and immediately offset the market and economic volatility that can be expected while this adjustment proceeds. More fundamentally, the future potential of this economy and its implications for jobs, real wages, and wealth are not the bank of england gifts, but will be joined by decisions made by others within the public and private sectors. However, by promoting monetary and Financial Stability, the bank can help facilitate these decisions, smooth economic adjustments, and help u. K. Households and businesses to seize new opportunity. We have a clear plan. We are rapidly putting its Main Elements in place, and it is working. The fpcs past efforts have created resilient Financial Institutions which can draw on substantial capital liquidity reserves to support the real economy even during challenging times. The contingency measures we put in place are addressing the immediate risk to the vote and addressing the Financial System using substantial capital facility buffers have that liquidity buffers they have in place, and their actions today alone have released lending capacity to the new economy. Going forward, the bank will continue to consult and cooperate with all relevant domestic and International Authorities to ensure the u. K. Financial system can concentrate on doing its job so that the british people can do theirs. Our various policy committees will work closely together to ensure that during this period of heightened uncertainty, measures we take will be as effective as possible. In this spirit, the bank will be expected to take whatever action is needed to promote monetary as Financial Stability, and a consequence, support the real economy. These efforts will mean we can all look ahead, not look over our shoulders. With that, andrew, john, and i are pleased to answer your questions. Please say who you are and who you represent and stick to one question for the initial go around. Thank you. Thank you. I am from sky news. What would you say to those who say we are a few weeks on from the referendum, the ftse is higher than it was before, stock markets do not look like they are in crisis, the pound has stabilized, the government can borrow at less than 1 . It does not quite look a scary to a lot of people as they thought it might be. Carney lets focus on the positive, which is that the Financial Markets are doing their job. They are adjusting to this change. As i said in my opening comments, it is detailed in the report. The markets have cautioned pretty well. There has been some reduced volume and yield markets and some heightened volatility, but not inconsistent with the scale of the issue. The directions of movements and i am not commenting on levels, but the directions of movements have been broadly consistent with some of the adjustments that are necessary in particular, the adjustment in sterling, which has been significant. It has been significant, and it was sharp in the initial period. Volatility spiked at its highest level ever. But that adjustment has moved in the direction that is necessary to facilitate some of the economic adjustments that are going to be required in the economy. The comment i would make in terms of the equity markets is i would focus a little more on the domestically focused stocks, the ftse 250 or the component in the ftse 100 that is serving this economy. It has been a much more significant move in those equities in pound terms and in common currency terms, certainly in dollar terms. Quite notable. And that gives a sense of Investor Expectations which may not prove out, but Investor Expectations in the direction of the economy. The thing i would end with and reinforce is that the movements in Financial Assets related to banks have been quite telling. As i said in my opening comments, detailed in the report, the movement in equity prices is consistent with concerns about the economic direction, economic uncertainty, but the allin funding cost for banks, whether measured in the cash market or the derivative markets, have not really budged, and that is a testament to the resilience that has been built up, so it is a concern that the Economic Outlook, consistent with what is happening in the equity market as opposed to concerns about resilience all of that comes back to an ability to this economy to adjust, and of course that adjustment builds on the fundamental strength of the u. K. , which are legion, starting with human capital, extending through human through the will of law and infrastructure, and i would argue the institutions as well. You said before the referendum that there was a possibility of a technical recession. Given what the Financial Stability report has said about the resilience of the Financial System, have those fears been alleviated, that infect the dynamism of the u. K. Economy, the falling sterling, will create a boost which may be was not expected before the referendum . Gov. Carney first off, the fpc does not make an economic forecast. It looks at the outlook for Financial Stability, the risks around that outlook, and then takes measures to build resilience and, where possible, alleviate specific risks. For forecasting, we rely on the mpc. I am going to defer the answer to that question until the mpc has opined. The mpc, though, always recognized that movement in sterling would help with the adjustment. The question is the scale of the other effects, the impact on this change ondemand the impact of this change on demand, demand for large irreversible investments, whether somebody is buying a house, building or buying commercial real estate, making Large Business decisions, business investment. There is a growing body of evidence across all of those before the referendum that all of those were slowing. It was an observation of the mpc and it has been resubmitted in everything we have seen since. So that does suggest that movements in the economy that are consistent, notwithstanding the movement of the Exchange Rate or the taking into account the movement in the Exchange Rate, that there is the prospect of material slowing in the economy. To go to your question, is the Financial System doing its job . Yes. It is helping prices adjust. The banks are up and running, they are open. Credit is available for people who want it. We have reinforced that today. Hat will help this adjustment without question, it is going to dampen, cushion, make it better than otherwise it would be. We are in a very different world 2007. E were in the fpc has taken some action today to encourage the supply of credit. Can you tell us from your discussions with people in markets, thanks, whether you think there is a squeeze on credit or whether the action is raising the demand for credit, and what you are hearing about the willingness of people to take on loans at the moment . Gov. Carney your question is spot on, because if we do see a slowing in credit growth, it will be demand driven, not supply driven. The decision of the fpc, which was carefully considered, as you ,ould expect, took into account in effect we are saying we are seeing signs and expect them to continue for a change in the risk environment. A muchrisk adverse more riskaverse environment. And given that the core resilience of the banks, it is important to ensure that there is no question about the availability of credit. That is the one thing we want to take off the table, and we are fortunately in a position, due to the hard work of people who started long before i showed up only andrew can take credit for this at the table, and many other things, i might add. But to build up this capital over time, we are in a position where we can release some of that capital. Take that issue off the table. Thus far, we have also been able to reduce concerns about market functioning as well. The Financial System is functioning, which should help the adjustment. The decisions about demand for credit will be more governed by the degree of uncertainty about relationship with europe, future structure of this economy, how quickly that is resolved. As i tried to say thats as i tried to say last week, it will be more governed not by the bank of england but by plans of others which are still being formulated. About one of the risks. How the housing crash could be in the u. K. You other you raise another concern about general high Household Indebtedness. We have been concerned for some time in these issues we have been concern for some time about these issues. The possibility that there will be more vulnerable households because the economic environment turns, and that that could wave on the Economic Outlook, make the subsequent pickup shallower, that is why we put in place and we are pleased that we put in place a few years ago the it isto restrict also why the pra took action earlier this year to ensure that there was no slippage in underwriting standards, that people were testing against income if they were using that as a backstop, if they were using reasonable stressed Interest Rates. Those measures help ensure that the protections in underwriting exist. They make it less likely that we will get this amplification channel if the Housing Market does turn for a sustained joe of time. So it is for a sustained period of time. I apologize if it sounds a bit like a broken record, but this is a different it comes to the same conclusion, but from a different point. Severeucted a very housing stress test in 2014 against the major banks with a 35 fall in house prices, 30 fall in commercial real estate, a sharp increase in Interest Rate. Anyway you could stress any way you could stress the Balance Sheet, we did it. Then we made sure those institutions were well capitalized against that not just able to withstand it, but able to lend in that environment. What we are seeing now, and there is some detail in the report on this, even by the most pessimistic view of where bank equities have gone, it is nowhere near that stress test. Not even half of that stress test. It would give you a sense, or should give you a sense, and people who are watching this who ultimately go to a bank, it gives them the confidence that the core of the system is very strong. We may see some volatility, we may see some things move around. But the system is going to be there for someone who wants to buy a house, or a business person with viable plan. A couple of questions, if i can. Ut the easing of capital you are doing that from already low levels. With hindsight, do you regret allowing banks to pay out dividends . Would it not have been better to . Ait in see to wait and see my second question, you have talked about the robustness of banks. What about the robustness of british households . You note here that the fpcs policies have restrained growth in british households. How many households all from herbal how many households are vulnerable . Gov. Carney we have no regrets about the dividend policies of the banks. The fact is, our view is that the banks are in a position where they have more capital than they need for the economic environment that they are in, and that they will be in over the course of the next few years. They can be part of the solution, not part of the problem. That is why second point, the market agrees with us. ,e have had this big shock which has resulted in a quite notable fall in equity prices not just the banks, but a domestically but in domestically focused british companies. We have movement in the guilt curve, which are not consistent with acceleration with the pace of growth in this economy. They are negative. And yet, all of the funding costs for banks have not moved, so they have a tough environment. But the judgment around their fundamental credit worthiness has not changed. Why is that . Is be it is because there is a lot of capital, a lot of the quickly a lot of liquidity. There are always things that they can do better, and the market is focused on getting their returns up, which partly explains the equity performance. But in terms of doing their core job, they are well capitalized. Because they are well capitalized, because they built wet 130 billion of capital, are able for them to release now this additional amount of capital, which we had carved out for the countercyclical. This is a system working as it should. You asked a second question of households. The ratio of Household Debt to Household Income it was high before the prices. It was high before the crisis. He came down after the financial crisis and stayed relatively quiet, but in recent years it has moved up a little bit as the economy started to grow, about 134 . We monitor that closely for that reason, because households that are highly indebted tend to cut back their consumption very strongly when they are faced with Interest Rate shocks or income shocks. There is volatility there. That is precisely the reason we took the action we took a couple of years ago to restrict the flow on a high load to income mortgages and to ensure households are tested when they took out new mortgages against increases in Interest Rates. Their action has had a result. It has slowed down growth and it has reduced the numbers of households that will be vulnerable to income shocks or Interest Rate shocks. But clearly it is something we need to watch closely for the future for precisely that reason. Governor, can i just get your feeling for how fragile you think u. K. Households are in the aftermath of the brexit vote . N was saying, you have debt to income at 132 , a historically high level. In 2014, the fpc judged Household Indebtedness did not pose a risk. How do you feel about that now . Well, in 2014 is when we took the measures that jon just alluded to. We were worried about the distribution of high indebtedness, and we took action. We took quite notable action. There has been some progress since then. The number of highly vulnerable households, households with Debt Service Ratios above 35 , has come down. Overall Debt Service Ratios have come down as well, so there has been a steady improvement in the distribution of debt and the proportion of households that are highly vulnerable. Obviously, the economic environment matters tremendously. If it is a difficult economic environment for a long period of time, those distributions shift and it becomes more of a concern. One of the ways to avoid that situation, or to minimize that situation, or to cushion against the tendency of the shock bringing us into that direction, is to make sure that the directional system is and toning and is there, the maximum extent possible, to make sure that people know that it is there. What we do not want to have happen is that there is a judgment that people live through lived through 2007, 2011, 2012,2010, and their art traces of it even today, certainly the darkest period of the crisis of recession. Opportunities fell by the wayside. We do not want that to happen now. We have a system that should ensure that it does not happen, and we are sending a very not just a signal with todays action, and really creating room on the Balance Sheets of these institutions. And i would underscore that in our discussions with them and our supervision of them that we are confident that they have the orientation toe meet the responsibilities. That will help with the situation with households, to go back to your point. Again, on this issue of households and their level of ndebtedness, what is your message to people who are thinking about taking out a loan when you are also warning that we could be entering very difficult economic times. What should people be doing . Gov. Carney we are advising people to be prudent. We always advise people to be prudent, whether times are good or difficult. Certainly, if you are taking on a mortgage, you at some point over the life of that mortgage, times will be difficult. It might be at the start, it might be five years in, 10, 15, whatever. So you want to make sure as a family and an individual that you will be able to service that mortgage if times are touched. If times are tough. Thinking through where Interest Rates could go, where your asnings could go appropriate, that is the first thing. But we would tell you that if we are in the 10th year of a boom, it would be the same message in the 10th year of a boom, it would be my successors successor. But the second thing is this point which i just made, that the system will be there. If you do want to take out a mortgage, it should be there. If it is a viable business opportunity, the system should be there. Because of the hard work over the course of the last 7, 8 years, and because we are able as a consequence of that to ensure that capital can be deployed to lend to businesses and households as they need it. So just on the current draw indeficits, you the report the importance of income and declining profits and this, and trade will have a different effect. Do you have any sense of how these things will balance out in the overall and the overall falling pound will be beneficial to the account, or worsen it . Gov. Carney the movements in sterling should be beneficial , for the current account. There are some issues in terms of the composition of the move, given where some of the Major Investments of u. K. Institutions, u. K. Individuals are. They tend to be more resident in europe than they are in the u. S. Adjustment, the helps on the trade balance side, will help on the capital account side, helps on the liability side because most liabilities in the u. K. Are denominated in sterling, so we have the right wave of risk in that regard. It helps with the current account. But the current account is a of factors, variety including the balance of savings investment decisions. The pace of investment will also be quite important in terms of where the balances go over time. On thursday you indicated that further monetary policies may be in the offing in the next few months over the summer. Can you give us an update . You said Interest Rates could go and that the mpc may do quantitative easing instead. Well, i will try to answer this carefully in a way that does not mislead, because i do not want to mislead about any decision that the mpc the mpc has yet to meet the referendum. We are about to start the process for the july meeting, so we have not had formal deliberations about these issues. But the basic point i want to make and i referred to it on andsday and effort referred maybe obliquely to it here. But i want to spell it out. In an environment where the bank rate is already quite low, it is extremely important that any monetary action, whatever it would be, as well and, that it focuses on the domestic economy. That it takes into account potentially unintended or counterproductive, if you will, offsetting consequences in the financial sector. You probably know my views on the more extremes of negative Interest Rates, and giving back with the other hand, or taking back with the other hand when you are trying to give with one. Certainly the case in the United Kingdom, giving the importance of Building Societies here and the construction of those markets. The general point i want to make and really stress is that during this period, the banks pra, the fpc,the and the mpc are really working closely together and thinking through the potential consequences, intended and unintended, and the net consequences of any actions the committee might take. Jim wallis of the telegraph. Yesterday Standard Life closed the doors on one of its commercial property funds. Ways to stopng at the rush for the door and stop fromommercial buyers reacting to the internet market . To the we have been highlighting issues around in mutualmismatches funds, depending on where on how they are structured. And the importance of having ,echanisms to manage outflows consistent with the underlying assets that are held. So these issues, we have been flagging. But i may ask andrew to expand a bit, because he is straddling between the two roles. Just put my fca had on for a moment. We have got openended funds with liquid assets, and i mean that in the sense that they do not revalue naturally. There needs to be a valuation process. So the fact of suspension is designed into a structure. It is not a panic measure, it is designed into the structures to deal precisely with that situation, whereas there has been some shock to the market, if you like, as a presumption of valuation adjustment, which is capturing assets on highfrequency. The purpose of the suspension is to create a pause, to allow that process to happen. That is sensible. It is sensible because in the structure of these assets, from a conduct point of view, we do not want differential treatment of investors. We do not want those to get in the door quickly to get a better deal than those who do not. So the suspension is designed into the structure. I should say we are in very close touch with the flows. Let me be clear on that. To stand back from that, it think comes back to i it does point to issues that we the design of these things. It comes back to my fundamental point that holding illiquid , required to be revalued at highfrequency, there is a thism for an orderly is a pulmonary feeling, that we will need to come back and look at that issue. The point of view of conduct and from systemic stability. Governor, do you have the 50,city to handle article triggered in terms of the operations, and make sure that the bank does its job efficiently, for two years and thereafter . Do you need more staff, more guidance . Gov. Carney the answer is, we do have the capacity. We will have to reprioritize what we work on, but we will do that. , wehe hierarchy of things would be hardpressed with the day to day response abilities of our committees, i am hardpressed to think that i am not going to try to think of something that will be more important than this process once the process begins. But our contribution would be technocratic, analytic. It will focus into the efforts of the government, and will be guided by them. Let me stress, though, what i said at the outset. Until that process is finished and actually be on that depending on how the process is structured and what the conclusions are of the country and the agreement, until a you law ceases to take effect until eu law ceases to take effect, we have the system in place and we will abide by it. Consistentorce it, with the laws and rules that are currently enforced. Forhere is that certainty institutions and the protection for deposit holders and others that come with it. Caroline denham, from the financial times. Months ago you stressed that there was a reallocation of capital to the countercyclical one, that there was no great the that the release was going to help with the provision of credit. I am just wondering, which is it . There was a clarification on one of your comments in your opening remarks. I just wanted to check. You said that it would be fine for banks to run down their buffers to about half of capital in all of liquidity . Gov. Carney on the first point the two are consistent. Be absolutelyt to clear about the spirit what happened over time, and before we had the countercyclical buffer system in place is that over a series of years, the pra would conduct stress tests either on an individual bank basis or initially across the bank. They would ascribe some of the ,udgment of that stress test putting in place a Macro Economic element, call the pra buffer. It was critical that it would be held by Financial Institutions for cycle risk. Once the countercyclical buffer framework came into being, it made sense, the pra board agreed, the fpc agreed to take that capital and reclassify it as countercyclical, as part of the countercyclical buffer. That was equal to about half a percent of riskweighted assets. That was actual capital, 5. 7 billion, as it turns out, that was reclassified. Because of the nature of the pra process, they had done this for about three quarters of the banks, but those banks accounted for 90 of the lending. As of six months ago, we had a situation where those banks had an explicit and transparent amount, half a percent buffer for the countercyclical. ,he other quarter of banks mainly challenger banks, that were going to have to raise capital to get up to that half percent, because they had not allocated it yet. They had to raise capital. We have taken that amount, that 5. 7, and you do not need it. The risk environment has changed. That releases it. So it is actual capital that we could not have done that six months ago, 12 months ago, before we had actually move did there because it had not been identified. It did not have that purpose, and it was not a way to be consistent across the institutions. And so it is so it is real capital that is there that now the cap that now the banks do not need to have. If i could move your second question, it goes directly into that. How do these buffers work . When you have a countercyclical buffer, it sits on top of the other buffers, whether they are systemic offers or the socalled capital conservation buffers. They all sit in a stack. If the banks capital goes down, is reduced because they make losses or they expand their Balance Sheet too fast into those buffers, then they have restrictions on dividends and potentially compensation, or both. If it goes well into it, elimination of dividends, supervisory judgment there. But the system is designed that if there is a major shock, major persistent shock, the institution can dip into the buffers you have consequences. The consequences of fewer Dividend Payments over time, no Dividend Payments, and they can rebuild. It is not a hard minimum level. You can understand why management would like to avoid it, but they do not have to avoid it. If there is a big unexpected shock, they may not be able to avoid it, and it may be better for the system that they dipped into it. Our institutions are well north of these buffers. We have also we have made it, the distance between the buffers , where they are today, higher by half a percent with the positions we have taken. We have designed the system so that we have more buffers, a substantial portion of buffers relative to the minimum. So we do not get a sense that the system has some flexibility in it if there is a very large shock. Up ont to follow commercial property risks and potential spillovers into the real economy, given that you highlight in the report a substantial portion of prices commercial real estate the fact that a 10 fall in real 1 fallrices leads to a in investment and the fact that the mpc has suggested that delays to economic decisions whatto raise unemployment, are the potential ramifications of the commercial property crash on joblessness . Gov. Carney i think your question did a very good job of summarizing the channels. It is important that we at the fpc do not just identify a sector that something bad could happen to it and it is not necessarily an issue for the economy in and of itself. It has to amplify through other channels. One of the most important is the first one you raised, which is that the 75 of small and mediumsized of lending to small and Mediumsized Enterprises is secured against commercial property. So a generalized shift in the commercial property outlook or a generalized deterioration in the commercial property outlook can affect it certainly on the margin or maybe more severely the ability of those enterprises to have access to credit because they do not have the underlying collateral. It is not worth as much. Obviously the commercial property sector, the construction sector is an important part of the economy. We are seeing indicators not just in terms of volume of transactions, but leading indicators around construction that in the runup to the referendum, we are slowing moderately in construction. The possibility that that will continue has a direct knockon effect. We worry. What can we do about it . One of the things that andrew and his team have done and andrew, maybe you can expand if you wish is to make sure that the exposure of u. K. Banks to commercial property has been kept quite manageable. This has not been driven by u. K. Bank lending. These shifts in commercial property. The consequence of that is that we cut off, if you will, or greatly reduce, one of the amplification channels. This is not a big issue for u. K. Banks. That means to go back to withesses and households other activities, that it does not have a knockon effect there, and address other issues. Underlinewould just that point. There has been quite a big shift in the commercial property financing. If you go back before the financial crisis, it was heavily financed. Because of the financial crisis in this country, i would characterize what appeared to be Debt Financing providing what was equity financing. That was part of the problem with the financial crisis. What we have seen since the financial crisis, in recent years, is far more equity financing. It will absorb losses, as it should do. The second thing, i do not think i would point you to a chart that we have used quite a few times in the past, which distinguishes those companies that are heavy users, as you said, of commercial property as a source of security, and borrowing of those that are not. The latter have a very different economic prophecy in terms of how they adjust to changes in economic cycles. They can adjust more rapidly. Understanding that part of the system is important within the overall macro context. Report talksyour about how the fall in bank equity prices has been consistent with the stress tests, being consistent with a rise in unemployment to 7. 5 . A fall in commercial real estate prices of 15 to 20 . Is that now the worstcase scenario that the bank is planning for . Gov. Carney no. That is a very clever question. Arithmetic calculation. If you took the entire adjustment in bank equity, the falls in u. K. Focused banks equity and as scribe it to a environment and use 81 if 142015 stress test, it is equivalent to roughly half. And roughly half is consistent with the numbers you just quoted. We have to factor in a couple of things. First, and equity market view that has been blended with a bank stress test. Secondly, that equity markets sometimes overshoot or undershoot, so it is not precise. There is an element of Bank Share Price movements that have been focused on returns, because do they have the right business model. That has affected certain institutions more than others. There is also a question, to go back to Scott Hamiltons question, about the path of Monetary Policy and the potential feedback to bank returns there as well, which arguably also, for some investors at least in some institutions, would have affected equity prices. All of that is to caution taking forecast. What that analysis says to us, though, is that you have this big potential shock priced in to the equity market, and look what happens to the judgments of the funding markets to the banks credit worthiness, all in funding costs, basically not having moved. They have gone down a bit. If you factor in the cost of equity, they more or less have not moved and will bounce up and down as time goes on. There is nothing like what happened during the euro crisis for the financial Global Crisis to u. K. Banks. Even if there were this big economic shock and i am not saying there will be, but even if there were there is the consequence of Capital Market investors in the underlying resilience of these institutions. Maybe just less enthusiasm of a re perspective about maybe just less enthusiasm about their prospective returns. Thank you. Jason douglas from the wall street journal. Thei ask you to say more on financial picture, and have you detected any spillovers to the Financial Stability globally from the brexit vote . Are things well contained . Are youds of things discussing with Central Banks to mitigate any problems that might arise . Gov. Carney the first thing i would say, visavis the Central Banks, we have been in close contact with them, even more intensive contact in the runup to the referendum and in the immediate aftermath i would say coordination and cooperation was effective in Building Mutual understanding of the risks in the potential channels, helping to prepare private Financial Institutions. But also making sure that the networks that we build, whether through swap lines or other mechanisms, were in place and could be used if they needed to be used. And it is welcome. That is the system working well, and it helps ensure that if much more extreme scenarios had transpired, that the system could have addressed them. That is the first thing. In terms of spillover of the markets settle down a bit, it has heightened focus on these issues of bank profitability, bank Balance Sheets in some jurisdictions. There is a sense that there could be a heightened degree of risk aversion for a period of time. There is a general sense that there is a spillover there. , quitely we have seen remarkable in the true sense of the word, movements in global government yields, which suggest a certain path for the economy and as a consequence for policy. So the spillovers are notable. But the system globally has worked well. That have every confidence it will continue to do so. And then the last comment i would make is that, again, it is ultimately a judgment of the mpc, but in the run up to the vote, the global economy, most indicators in aggregate, the , andof growth had firmed so the environment was a more constructive environment than it would have been certainly earlier this year if the vote had been on the way it did earlier this year. On the way it did in terms of the expectations francine that was mark carney speaking at the bank of england, following a Financial Stability report, saying that he is trying to reassure the markets, saying there will be a tougher time because of brexit. , saying that there would be much more money to play with. Coming up, Carl Weinberg, and also bloomberg , for our tv viewers. Jonathan the bank of england places Capital Requirements to ensure stability. David injecting capital into its Third Largest banks as european financials heading to its worst year since 2008. Treasuries begin to peak where they left off. Jonathan from worldwide, a very warm welcome to bloomberg. Im Jonathan Ferro alongside david westin and alix steel. As my u. S. Colleagues, the u. K. March to its own liberation. David i hope it went as well for you as it went for us. Mark carney held a conference and we will ask our guests what happens coming up after that. Alix