Speaker 1: Global business news twenty four hours a day at Bloomberg
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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
Speaker 1: I'm Katherine Cowdery. Energy and financial shares are dragging the
Speaker 1: stock market lower as investors shy away from riskier assets.
Speaker 1: Banks are retreating for a second session, with JP, Morgan
Speaker 1: Chase and Goldman Sacks down at least two point eight percent.
Speaker 1: Comments from Bank of England Governor Mark Karney are rekindling
Speaker 1: concerns that Britain's exit from the European Union will further
Speaker 1: way on tepid global growth. Karney warned a day of
Speaker 1: prospects for a material slowing of the economy on the
Speaker 1: developing risks from Britain's EU decision. We talked to markets
Speaker 1: every fifteen minutes throughout the trading day. Down. Industrial averages
Speaker 1: down one d twenty five point seven tenths over percent
Speaker 1: at seventeen thousand, eight hundred twenty three. SMP five founded
Speaker 1: down seventeen points eight tenths of a percent to two
Speaker 1: thousand and eighty six. The NAZZAC is down fifty points.
Speaker 1: That's a loss of one percent. Is trading a West
Speaker 1: Texas innermediate crude oil down two dollars five cents of
Speaker 1: barrel four point six percent at seventy four. It's about
Speaker 1: gold of eighteen dollars forty cents an ounce at thirty
Speaker 1: and the tenure treasuring at seconds with the yield of
Speaker 1: one point three seven And that's a Bloomberg business flash.
Speaker 1: You're listening to Taking Stock with Kathleen and Pin Box
Speaker 1: on Bloomberg Radio. From June the twenty three, when the
Speaker 1: electorate in the United Kingdom voted to exit the European Union,
Speaker 1: the pound sterling has lost more than twelve percent against
Speaker 1: the US dollar. Here to tell us more about this
Speaker 1: ongoing story is David Buick. He is a market commentator
Speaker 1: for Penmir Gordon and Company and he joins us now
Speaker 1: from London. David, thank you very much for being with us.
Speaker 1: Pin Catherine, greetings to both of you. Tell us who
Speaker 1: is Teresa May and what is her vision for the
Speaker 1: future of the United Kingdom and for the Tour Party.
Speaker 1: Theresa May has just been through the first ballots to
Speaker 1: become the leader of the Conservative Party in the next
Speaker 1: Prime Minister. She pulled over a hundred and sixty votes
Speaker 1: which is pretty much half. Her nearest rival was Andrea
Speaker 1: Ledson with sixty three, and in third place was Michael Gove,
Speaker 1: who was the old Justice Secretary with and a young
Speaker 1: fellow called Stephen Grabb come in with thirty two and
Speaker 1: Liam Fox has been eliminated with eighteen. Theresa May has
Speaker 1: been Home Secretary for six years. She was basically very
Speaker 1: quiet at the entering the campaign, but she was a
Speaker 1: Ramoan rather than somebody wants that with We believe some
Speaker 1: kind of reservation and we have been entirely reliant in
Speaker 1: the course of the last nearly two weeks on the
Speaker 1: calming influence of our Governor of the Bank of England,
Speaker 1: Mark Karney, because the UK government has basically been moribundt.
Speaker 1: We've had a couple of speeches from George Osborne the
Speaker 1: Chance for the Exchequer, one fairly reassuring and one quite sensible,
Speaker 1: suggesting that rather than have an austerity budget, which he
Speaker 1: was suggesting with all kinds of horrific ideas, he's come
Speaker 1: back saying you'd like to cut corporation tax down from
Speaker 1: the current level of down to fifteen or even four,
Speaker 1: with a view pin of being able to compete with
Speaker 1: all the other nations in the world for attracting overseas business.
Speaker 1: The only country that comes close to that, of course,
Speaker 1: is the Republic of Ireland, which has a twelve and
Speaker 1: a half percent corporation tax rate. But that is a
Speaker 1: fairly small country with only about three and a half
Speaker 1: million people, so it's not exactly a huge competition for London.
Speaker 1: So David uh the immediate order of business is that
Speaker 1: as we watch UK politicians vying for that top job
Speaker 1: and get ready for the Parliament to vote and put
Speaker 1: that person in place. Certainly, if you're Mark Carney, the
Speaker 1: immediate impact is the very weak pound and the fact
Speaker 1: that it could hit capital flows at the time when
Speaker 1: you need to fund your current account deficit, which is
Speaker 1: something like seven percent of GDP today. He mentioned that
Speaker 1: when he spoke and announced steps to help the banks
Speaker 1: len More. He also mentioned already seeing an impact on
Speaker 1: the commercial real estate market. What are the markets watching
Speaker 1: more closely, basically what they're short of. I mean all
Speaker 1: those comments that you made, Mark Connie did make, of
Speaker 1: course he did. But what we are at the moment,
Speaker 1: unfortunately is rudderless without leadership, and markets and the community
Speaker 1: cope very well with good and bad news what they
Speaker 1: can't cope with his uncertainty, and we have had some
Speaker 1: pretty fisce. How could I describe it best campaign fear
Speaker 1: which has turned into campaign reality, which is like serving
Speaker 1: it up like John the Baptist head of our charger.
Speaker 1: In other words, if you want to be Solomon Tomorrow
Speaker 1: or profit of doom and end up in the vortex
Speaker 1: that would despair. That's how you said about it. And
Speaker 1: in my opinion some of the rhetory from the establishment
Speaker 1: has been hysterical. And of course if you want something
Speaker 1: to happen badly, it will do. And of course when
Speaker 1: it sees a government with which is rudderless for the
Speaker 1: period of really basically two weeks. In fact is probably
Speaker 1: longer than that because during the campaign there wasn't much
Speaker 1: sign of any intuition or any innovation at all. And
Speaker 1: of course we've seen, as Mark Carney imported pointed out today,
Speaker 1: commercial real estates turnover dropped by because investors are reluctant
Speaker 1: to invest in any country unless it shows drive zest
Speaker 1: urvan some innovation. We've also seen the domestic housing market,
Speaker 1: which is such an important part of our economy, virtually
Speaker 1: come to a grinding halt. And today, of course, we
Speaker 1: had the p M service sector which fell below fifty,
Speaker 1: which is the red light warning that things aren't good
Speaker 1: coming down coming in about forty six. So Mark Karney's
Speaker 1: much too smooth and operator, and also much too clever
Speaker 1: in his statesmanlike in his looks. But he would have
Speaker 1: smiled like a cheshire cat because he more or less
Speaker 1: tried to forecast this some time ago in stating very
Speaker 1: clearly that he felt it was the wrong move for
Speaker 1: the United Kingdom to come out of the European Union.
Speaker 1: So what is going to happen is that we've seen
Speaker 1: what's happened with the stock markets, which is quite clear
Speaker 1: because the FOOTE one hundred, which is based about seventy
Speaker 1: percent of the earnings are on dollar earnings and the
Speaker 1: rest of it up another ten percent on euros. So
Speaker 1: if the pound goes down, whoopee, we do very well.
Speaker 1: But what is interesting is the foot two, which is
Speaker 1: two companies half the sort of size of the SMP
Speaker 1: five hundred. But that is much more a barometer of
Speaker 1: life in the United Kingdom. And since that faithful day,
Speaker 1: the twenty two of June, the foot see two fifty
Speaker 1: has dropped by about eleven. That is very, very significant,
Speaker 1: and I think the foe would have dropped but for
Speaker 1: the value of the pound, which has obviously been in
Speaker 1: the favor of those people who've got equities in drug companies,
Speaker 1: tobacco companies, some banks, and various other issues. But what
Speaker 1: we need above everything else in this country is a
Speaker 1: restoration of confidence. And it is pretty horrific thought as
Speaker 1: far as I'm concerned that it's going to be the
Speaker 1: ninth of September before we know when we have our
Speaker 1: next prime minister. David Buke eloquently put we thank you
Speaker 1: so very much for joining us from London today. He's
Speaker 1: market commentator at Panner, Gordon and Co. Talking to us
Speaker 1: about uncertainty, talking us about what the difficulty of not
Speaker 1: having a prime minister at a time when so much
Speaker 1: needs to be done. This is taking stock. I'm Caffeine
Speaker 1: Hayes with pim Fox. This is Bloomberg coming up on
Speaker 1: taking stock. We're going to take stock of currencies. The
Speaker 1: Japanese yen gains more than one percent one oh one
Speaker 1: fifty three and also a look at the pounds, sterling
Speaker 1: and the euro against the dollar. It