WEBVTT - Panmure's Buik: UK Needs a Restoration of Confidence (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>dot Com, the Radio plus Global Act and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Katherine Cowdery. Energy and financial shares are dragging the

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<v Speaker 1>stock market lower as investors shy away from riskier assets.

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<v Speaker 1>Banks are retreating for a second session, with JP, Morgan

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<v Speaker 1>Chase and Goldman Sacks down at least two point eight percent.

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<v Speaker 1>Comments from Bank of England Governor Mark Karney are rekindling

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<v Speaker 1>concerns that Britain's exit from the European Union will further

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<v Speaker 1>way on tepid global growth. Karney warned a day of

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<v Speaker 1>prospects for a material slowing of the economy on the

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<v Speaker 1>developing risks from Britain's EU decision. We talked to markets

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<v Speaker 1>every fifteen minutes throughout the trading day. Down. Industrial averages

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<v Speaker 1>down one d twenty five point seven tenths over percent

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<v Speaker 1>at seventeen thousand, eight hundred twenty three. SMP five founded

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<v Speaker 1>down seventeen points eight tenths of a percent to two

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<v Speaker 1>thousand and eighty six. The NAZZAC is down fifty points.

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<v Speaker 1>That's a loss of one percent. Is trading a West

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<v Speaker 1>Texas innermediate crude oil down two dollars five cents of

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<v Speaker 1>barrel four point six percent at seventy four. It's about

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<v Speaker 1>gold of eighteen dollars forty cents an ounce at thirty

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<v Speaker 1>and the tenure treasuring at seconds with the yield of

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<v Speaker 1>one point three seven And that's a Bloomberg business flash.

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<v Speaker 1>You're listening to Taking Stock with Kathleen and Pin Box

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<v Speaker 1>on Bloomberg Radio. From June the twenty three, when the

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<v Speaker 1>electorate in the United Kingdom voted to exit the European Union,

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<v Speaker 1>the pound sterling has lost more than twelve percent against

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<v Speaker 1>the US dollar. Here to tell us more about this

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<v Speaker 1>ongoing story is David Buick. He is a market commentator

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<v Speaker 1>for Penmir Gordon and Company and he joins us now

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<v Speaker 1>from London. David, thank you very much for being with us.

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<v Speaker 1>Pin Catherine, greetings to both of you. Tell us who

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<v Speaker 1>is Teresa May and what is her vision for the

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<v Speaker 1>future of the United Kingdom and for the Tour Party.

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<v Speaker 1>Theresa May has just been through the first ballots to

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<v Speaker 1>become the leader of the Conservative Party in the next

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<v Speaker 1>Prime Minister. She pulled over a hundred and sixty votes

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<v Speaker 1>which is pretty much half. Her nearest rival was Andrea

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<v Speaker 1>Ledson with sixty three, and in third place was Michael Gove,

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<v Speaker 1>who was the old Justice Secretary with and a young

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<v Speaker 1>fellow called Stephen Grabb come in with thirty two and

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<v Speaker 1>Liam Fox has been eliminated with eighteen. Theresa May has

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<v Speaker 1>been Home Secretary for six years. She was basically very

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<v Speaker 1>quiet at the entering the campaign, but she was a

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<v Speaker 1>Ramoan rather than somebody wants that with We believe some

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<v Speaker 1>kind of reservation and we have been entirely reliant in

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<v Speaker 1>the course of the last nearly two weeks on the

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<v Speaker 1>calming influence of our Governor of the Bank of England,

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<v Speaker 1>Mark Karney, because the UK government has basically been moribundt.

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<v Speaker 1>We've had a couple of speeches from George Osborne the

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<v Speaker 1>Chance for the Exchequer, one fairly reassuring and one quite sensible,

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<v Speaker 1>suggesting that rather than have an austerity budget, which he

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<v Speaker 1>was suggesting with all kinds of horrific ideas, he's come

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<v Speaker 1>back saying you'd like to cut corporation tax down from

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<v Speaker 1>the current level of down to fifteen or even four,

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<v Speaker 1>with a view pin of being able to compete with

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<v Speaker 1>all the other nations in the world for attracting overseas business.

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<v Speaker 1>The only country that comes close to that, of course,

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<v Speaker 1>is the Republic of Ireland, which has a twelve and

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<v Speaker 1>a half percent corporation tax rate. But that is a

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<v Speaker 1>fairly small country with only about three and a half

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<v Speaker 1>million people, so it's not exactly a huge competition for London.

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<v Speaker 1>So David uh the immediate order of business is that

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<v Speaker 1>as we watch UK politicians vying for that top job

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<v Speaker 1>and get ready for the Parliament to vote and put

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<v Speaker 1>that person in place. Certainly, if you're Mark Carney, the

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<v Speaker 1>immediate impact is the very weak pound and the fact

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<v Speaker 1>that it could hit capital flows at the time when

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<v Speaker 1>you need to fund your current account deficit, which is

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<v Speaker 1>something like seven percent of GDP today. He mentioned that

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<v Speaker 1>when he spoke and announced steps to help the banks

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<v Speaker 1>len More. He also mentioned already seeing an impact on

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<v Speaker 1>the commercial real estate market. What are the markets watching

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<v Speaker 1>more closely, basically what they're short of. I mean all

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<v Speaker 1>those comments that you made, Mark Connie did make, of

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<v Speaker 1>course he did. But what we are at the moment,

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<v Speaker 1>unfortunately is rudderless without leadership, and markets and the community

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<v Speaker 1>cope very well with good and bad news what they

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<v Speaker 1>can't cope with his uncertainty, and we have had some

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<v Speaker 1>pretty fisce. How could I describe it best campaign fear

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<v Speaker 1>which has turned into campaign reality, which is like serving

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<v Speaker 1>it up like John the Baptist head of our charger.

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<v Speaker 1>In other words, if you want to be Solomon Tomorrow

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<v Speaker 1>or profit of doom and end up in the vortex

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<v Speaker 1>that would despair. That's how you said about it. And

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<v Speaker 1>in my opinion some of the rhetory from the establishment

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<v Speaker 1>has been hysterical. And of course if you want something

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<v Speaker 1>to happen badly, it will do. And of course when

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<v Speaker 1>it sees a government with which is rudderless for the

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<v Speaker 1>period of really basically two weeks. In fact is probably

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<v Speaker 1>longer than that because during the campaign there wasn't much

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<v Speaker 1>sign of any intuition or any innovation at all. And

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<v Speaker 1>of course we've seen, as Mark Carney imported pointed out today,

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<v Speaker 1>commercial real estates turnover dropped by because investors are reluctant

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<v Speaker 1>to invest in any country unless it shows drive zest

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<v Speaker 1>urvan some innovation. We've also seen the domestic housing market,

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<v Speaker 1>which is such an important part of our economy, virtually

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<v Speaker 1>come to a grinding halt. And today, of course, we

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<v Speaker 1>had the p M service sector which fell below fifty,

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<v Speaker 1>which is the red light warning that things aren't good

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<v Speaker 1>coming down coming in about forty six. So Mark Karney's

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<v Speaker 1>much too smooth and operator, and also much too clever

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<v Speaker 1>in his statesmanlike in his looks. But he would have

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<v Speaker 1>smiled like a cheshire cat because he more or less

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<v Speaker 1>tried to forecast this some time ago in stating very

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<v Speaker 1>clearly that he felt it was the wrong move for

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<v Speaker 1>the United Kingdom to come out of the European Union.

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<v Speaker 1>So what is going to happen is that we've seen

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<v Speaker 1>what's happened with the stock markets, which is quite clear

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<v Speaker 1>because the FOOTE one hundred, which is based about seventy

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<v Speaker 1>percent of the earnings are on dollar earnings and the

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<v Speaker 1>rest of it up another ten percent on euros. So

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<v Speaker 1>if the pound goes down, whoopee, we do very well.

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<v Speaker 1>But what is interesting is the foot two, which is

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<v Speaker 1>two companies half the sort of size of the SMP

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<v Speaker 1>five hundred. But that is much more a barometer of

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<v Speaker 1>life in the United Kingdom. And since that faithful day,

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<v Speaker 1>the twenty two of June, the foot see two fifty

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<v Speaker 1>has dropped by about eleven. That is very, very significant,

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<v Speaker 1>and I think the foe would have dropped but for

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<v Speaker 1>the value of the pound, which has obviously been in

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<v Speaker 1>the favor of those people who've got equities in drug companies,

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<v Speaker 1>tobacco companies, some banks, and various other issues. But what

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<v Speaker 1>we need above everything else in this country is a

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<v Speaker 1>restoration of confidence. And it is pretty horrific thought as

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<v Speaker 1>far as I'm concerned that it's going to be the

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<v Speaker 1>ninth of September before we know when we have our

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<v Speaker 1>next prime minister. David Buke eloquently put we thank you

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<v Speaker 1>so very much for joining us from London today. He's

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<v Speaker 1>market commentator at Panner, Gordon and Co. Talking to us

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<v Speaker 1>about uncertainty, talking us about what the difficulty of not

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<v Speaker 1>having a prime minister at a time when so much

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<v Speaker 1>needs to be done. This is taking stock. I'm Caffeine

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<v Speaker 1>Hayes with pim Fox. This is Bloomberg coming up on

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<v Speaker 1>taking stock. We're going to take stock of currencies. The

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<v Speaker 1>Japanese yen gains more than one percent one oh one

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<v Speaker 1>fifty three and also a look at the pounds, sterling

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<v Speaker 1>and the euro against the dollar. It