WEBVTT - Wraith: UK more dynamic than euro zone

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

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<v Speaker 1>this is a Bloomberg Business Flash and I'm Cameron Moscow.

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<v Speaker 1>US dot Indise futures are a little change this morning.

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<v Speaker 1>Let's go to the First Word Breaking news desk for

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<v Speaker 1>today's morning call, and here's Bill Maloney. Good morning Bill,

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<v Speaker 1>Good morning Karen. That's right. US futures are now trading

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<v Speaker 1>little changed as crew features fade from their highs. Down

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<v Speaker 1>futures hied by eight points, recipes are unchanged, and Nazak

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<v Speaker 1>futures are lower by two. Shanghai plung six point four

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<v Speaker 1>percent overnight as money market rates surged, while up markets

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<v Speaker 1>are trading higher Land by two percent, gains in France, UK,

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<v Speaker 1>Italy and Spain on the US economic front. At eight fifteen,

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<v Speaker 1>fed's Lockhart speaks in Atlanta at a thirty initial jobs

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<v Speaker 1>claims and durable goods orders. At ten thirty natural gas

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<v Speaker 1>storage change, and at eleven o'clock Kansas City FED after

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<v Speaker 1>Dibilis night's salesforce boosted your views trans Ocean Beat and

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<v Speaker 1>Restoration Hardware Q four Polimer EPs missed estimates, shares her

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<v Speaker 1>down twenty percent pre market regard airings this morning, Domino's Pizza,

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<v Speaker 1>an Vesti on beat, Coles EPs beat, revenues, war in line,

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<v Speaker 1>and Best Buy Q four EPs beat, although comps sales

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<v Speaker 1>missed estimates. Finally some ye early while Sheheet upgrades and downgrades.

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<v Speaker 1>Advisory board race to Bibs, sold over at Deutsche Bank,

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<v Speaker 1>Cooper Tire raised to neutral versus Celicalman Sachs Charter race

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<v Speaker 1>to ovod a JP Morgan, and finally Restoration Hardware cuts

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<v Speaker 1>a sector way to keep bank and cut to neutral.

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<v Speaker 1>Over at Robert Baird Live from the First Breaking News

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<v Speaker 1>Desk on Bill Maloney, Karen, all right, thanks Vailla to

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<v Speaker 1>hear live breaking news over your Bloomberg type squawk and

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<v Speaker 1>go on your terminal. That's s Q you a w

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<v Speaker 1>K go and s a Bloomberg business flash, Tom and

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<v Speaker 1>Mike Karn, thanks so much. Bloomberg surveillance. This morning is

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<v Speaker 1>always brunched by Investco. Factor based strategies can help investors

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<v Speaker 1>more and Investco dot com um slash high conviction, giving

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<v Speaker 1>us perspective on the United Kingdom economy. All of the

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<v Speaker 1>uproar over a brexit is John Wraith of UBS. John,

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<v Speaker 1>if you were to have on one on one with

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<v Speaker 1>the Chancellor of the Exchequer or the Prime Minister or

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<v Speaker 1>other elites of England trying to keep the nation within Europe,

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<v Speaker 1>what do you think you would hear? What's the number

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<v Speaker 1>one sales pitch from elites to do no harm? Um? Well,

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<v Speaker 1>I mean you know that the the argument has raged

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<v Speaker 1>in one sense or another for many years in the

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<v Speaker 1>UK about the relationships with the EU. I mean, I

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<v Speaker 1>think you know that the British people generally want convincing

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<v Speaker 1>that staying in it's going to be better economically, um

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<v Speaker 1>in the medium and long term. And that's something which

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<v Speaker 1>is an argument that not hasn't always been been clear.

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<v Speaker 1>And obviously, as we've been talking about already today, over

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<v Speaker 1>recent years at least the UK has been growing much

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<v Speaker 1>more dynamically and rapidly than the rest of the EU

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<v Speaker 1>and so near the Eurozone, so that that argument is

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<v Speaker 1>a difficult one to make, which I think explains why

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<v Speaker 1>opinion balls have been have been pointing to such a

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<v Speaker 1>close outcome. One of those things like trying to convince

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<v Speaker 1>people trade is a good idea because it's easy to

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<v Speaker 1>find a picture of the guy who's out of work,

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<v Speaker 1>and much harder to the dispersion of benefits. Yeah. And

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<v Speaker 1>you know, again, as as with everything to do with

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<v Speaker 1>this reference, and there's two sides to every argument. And

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<v Speaker 1>there are a lot of voters in the UK who

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<v Speaker 1>feel threatened by the open access to the UK labor

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<v Speaker 1>markets for other EU citizens. But but equally there are

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<v Speaker 1>some who see the sort of efficient labor that they

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<v Speaker 1>bring with them and the wider economic benefits that arguably

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<v Speaker 1>are delivered. So you know, these things we'll keep raging.

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<v Speaker 1>And that's one reason why we and most people think

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<v Speaker 1>that the debate is going to remain up in the

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<v Speaker 1>air until the day of the vote itself, which will

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<v Speaker 1>will probably continue to undermine sterling among other things over

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<v Speaker 1>the coming months. Uh. We always talk about a currency

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<v Speaker 1>being weak or strong, as if strong was good and

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<v Speaker 1>weak was bad. What's going to be the impact on

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<v Speaker 1>GDP in the UK from a weaker sterling? How long

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<v Speaker 1>is the jcurve effect? Yeah, well, I mean that's that's

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<v Speaker 1>one of the ironies in this is that as long

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<v Speaker 1>as the fall in the pound is reasonably stable and orderly,

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<v Speaker 1>it's actually got a lot of benefits to bring to

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<v Speaker 1>the UK. We're in a situation where global demand, as

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<v Speaker 1>we discussed before, is potentially slowing, and therefore, you know,

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<v Speaker 1>for for for trading markets, having a more competitive currency

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<v Speaker 1>might help tap into that lesser overall demands. Um. The

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<v Speaker 1>UK also, in common with a lot of other countries,

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<v Speaker 1>has inflation well below the central banks target and and

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<v Speaker 1>a and a weaker currency should raise imported inflation, so

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<v Speaker 1>that there are certainly some benefits to the lower level

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<v Speaker 1>of sterling. But it does smack of a loss of

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<v Speaker 1>investor confidence and some overseas investors taking or slowing their

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<v Speaker 1>investments into the UK because they're worried about the outcome.

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<v Speaker 1>So you as long as it doesn't become a protracted

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<v Speaker 1>and rapid for starting to call into account into question

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<v Speaker 1>the current account situation, then you know there's certainly it's

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<v Speaker 1>certainly not all bad to see sterling weaker. For sure,

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<v Speaker 1>this um going to change the calculation for the Bank

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<v Speaker 1>of England at all. Well, they're very careful at the

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<v Speaker 1>moment not to sound to opinionated one way or the other.

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<v Speaker 1>They obviously can't comment on such political events as a referendum,

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<v Speaker 1>other than to say they're aware of it, and they

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<v Speaker 1>did say that they think it's one of the reasons

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<v Speaker 1>behind the weakness of sterling. But they will wait for

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<v Speaker 1>the outcome and they will react accordingly. And if, as

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<v Speaker 1>in our view, the UK stays in the EU recovery continues,

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<v Speaker 1>lost momentum returns, then we see they'll very quickly tell

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<v Speaker 1>the market that it's got too dubbish and too concerned

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<v Speaker 1>about the outlook. Fifteen seconds, what's your calling Europe when

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<v Speaker 1>you're just a dovetail that was sterling. Um, Well, we're

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<v Speaker 1>more upbeat on the outlook for the for the Eurozone

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<v Speaker 1>than than the consensus. We think growth fair is going

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<v Speaker 1>to be a bit quicker. Um. As far as the

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<v Speaker 1>sort of euro sterling exchange rates concerned, we see it,

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<v Speaker 1>you know, potentially ending this year, not far from current levels,

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<v Speaker 1>but big, fairly volatile in the interim. January is exceptionally valuable.

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<v Speaker 1>Thank you so much. What a primer on all that's

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<v Speaker 1>going on, you know, the Kingdom. And I need to

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<v Speaker 1>give a shout out to Francine McQuire who was way

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<v Speaker 1>out front of this, Michael. She told me in Davos

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<v Speaker 1>before Darva's time, it's gonna be a huge deal. You

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<v Speaker 1>Americans don't get it. She was totally right, big deal.

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<v Speaker 1>I'm not sure Americans didn't get people. Excuse me, I didn't,

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<v Speaker 1>But then I didn't get red stacks. I mean, it's

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<v Speaker 1>almost the time a year where I have to try

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<v Speaker 1>to gauge at I done with the Red Sox in

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<v Speaker 1>late April or early day. I'd give them to me.

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<v Speaker 1>They maybe have fixed gotten the team better. That's the

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<v Speaker 1>pound euro cross, euro sterling. We'll quote that some more.

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<v Speaker 1>I'm so I've been remiss not to quote that. What

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<v Speaker 1>I can quote flat euros yields are infractually one seventy three.

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<v Speaker 1>I'm gonna call it a quiet tape. Oil churrance there

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<v Speaker 1>thirty two on American oil Brent cr right now down.

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<v Speaker 1>Uh since Michael mentioned euro sterling uh point seven eight

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<v Speaker 1>nine four pence, it's like Michael Pence Nobel laureate, they

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<v Speaker 1>had one twelve fifty three. Stay with us, We're pun friendly.

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