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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.

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Speaker 1: This is a Bloomberg Business Flight from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pellett. Stocks are tumbling the most since January,

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Speaker 1: joining a sell off in global risk assets on speculation

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Speaker 1: that the UK decision to leave the European Unional hamper

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Speaker 1: worldwide growth. Our coverage continues here on Bloomberg Radio. The

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Speaker 1: SMP five hundred index down sixty three points after the

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Speaker 1: Brexit vote to two thousand forty nine, a drop there

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Speaker 1: of three percent down. Industrials down five hundred eighteen points

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Speaker 1: now at seventeen thousand, four hundred ninety three. That is

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Speaker 1: a drop of two point nine percent, and has stacked

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Speaker 1: down one hundred eighty three points, a drop of three

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Speaker 1: points seven percent. The tenure yield one point five eight percent.

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Speaker 1: Gold surging fifty seven dollars an ounce of thirteen twenty,

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Speaker 1: a gain of four and a half percent. Crude oil

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Speaker 1: down four point four percent, down to twenty two barrel

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Speaker 1: forty seven nightty right now on West Texas in media Crude,

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Speaker 1: I'm Charlie Palli. That's a Bloomberg Business Flash you're listening

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Speaker 1: to with on Bluebird Radio. In a historic vote, the

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Speaker 1: British Electorate decides to exit the European Union and Prime

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Speaker 1: Minister David Cameron decides to resign the premiership. Here to

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Speaker 1: tell us more is Kit Jukes. He is global head

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Speaker 1: of Foreign Exchange Strategy for Associate A General. He is

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Speaker 1: based in London and he can be followed on Twitter

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Speaker 1: at Kit Jukes and Kit. I was gonna remember a

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Speaker 1: couple of quotations from Richard this second, particularly that one

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Speaker 1: about well England as the happy breed of men, this

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Speaker 1: little world, this precious stone set in a silver sea.

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Speaker 1: Is this going to be a Shakespearean moment for the

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Speaker 1: British people? H it needs to sens shakespeare a moment

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Speaker 1: intense and in sense of making a political decision that will,

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Speaker 1: you know, will reverberate for the next generation in terms

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Speaker 1: of the relationship with Europe, which is what all UK

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Speaker 1: politics is about. So I wouldn't understate the importance. Um,

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Speaker 1: you know, at the moment it's it's the negotiating period.

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Speaker 1: So the uncertainty for the next couple of years and

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Speaker 1: whether that has to go through I don't know, you know, anger,

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Speaker 1: denial and then finally acceptance that we have to make

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Speaker 1: the best of what we've decided to do. Um So,

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Speaker 1: so I'm nervous about the anger denial phases of this

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Speaker 1: particular negotiation, and I suspect that while the negotiators will

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Speaker 1: take it slow. So so those are the things that

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Speaker 1: I worry about. But when when I get to the

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Speaker 1: final deal, we will have a different relationship with Europe,

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Speaker 1: and then we'll we'll see what Europe's relationship with itself

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Speaker 1: looks like and we'll kind of take it from that.

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Speaker 1: But yes, things have changed, tremendous volatility. I was here

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Speaker 1: last night preparing for De break Asia Kit and you know,

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Speaker 1: the first polls came out with him and I were

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Speaker 1: still doing our show Yes to Afternoon, and the pound

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Speaker 1: goes up and then all of a sudden the results

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Speaker 1: started coming in. Boom. It had its biggest drop in

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Speaker 1: six years. Now, it's reached its lowest level since. Am

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Speaker 1: I crazy to ask is it time to buy some pounds?

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Speaker 1: I'm not buying any but but it's not crazy to

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Speaker 1: ask when you're down. Here was my first year doing this,

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Speaker 1: and we felt a lot further. We got to one

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Speaker 1: oh five and five before the Plaza Accord came through

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Speaker 1: and turn things around, but you had higher interest rates.

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Speaker 1: My problem with buying the pound at the moment is

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Speaker 1: this period of uncertainty, Uncertainty about who's going to be

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Speaker 1: in charge of the Conservative Party and therefore leading the negotiations,

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Speaker 1: Uncertainty about how the negotiations negotiations go, along with my

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Speaker 1: concern that the first thing people do is go slow,

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Speaker 1: and also that in the anger denial phase of of

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Speaker 1: of of negotiating this split, people might not play nicely

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Speaker 1: initially they wouldn't have much incentive to do so so

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Speaker 1: and then and then during that period, you know, uncertain

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Speaker 1: it's not good for markets, and uncertain is not good

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Speaker 1: for economies. And although the UK economy is a small

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Speaker 1: economy in the great scheme of things, that the global

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Speaker 1: economy isn't exactly running fast enough for me to feel

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Speaker 1: good about things. So if if if the global economy

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Speaker 1: was tootling along at three, the US was growing at

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Speaker 1: two and a half and Europe was growing at two

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Speaker 1: and the Chinese were having a good time, I'd be

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Speaker 1: in a much better mood this evening than contemplating how

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Speaker 1: dreadful it would be if the U S economy goes

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Speaker 1: on slowing, kid Jukes, will Scotland hold another referendum to

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Speaker 1: leave the United Kingdom? Um, the instinctive yes is yes.

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Speaker 1: When all prices are higher than this, that that that

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Speaker 1: they'll they'll talk about it and they may decide to

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Speaker 1: do it. But that did the economics of an independent Scotland,

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Speaker 1: A separates Gobland and how they run their budget with

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Speaker 1: the old price down here is pretty ugly for them.

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Speaker 1: So I think that they'll be They'll not be in

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Speaker 1: a hurry, but they'll spend some time looking at the principle.

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Speaker 1: So for the sake of argument, it's in two years time,

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Speaker 1: the UK is most of the way through negotiations to

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Speaker 1: leave Europe, and the old price is you know, a

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Speaker 1: good bit higher. Uh, then I think the odds the

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Speaker 1: old shift in favor just about the This means for

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Speaker 1: the UK government bond market, because there's been a bit

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Speaker 1: of a rally there as people guess that, Uh, the

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Speaker 1: Bank of England is going to have to maintain a

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Speaker 1: very easy monterrey policy. So that's one part of it.

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Speaker 1: And again our Bloomberg intelligence team has did some work

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Speaker 1: saying how good the Remain vote would have been paving

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Speaker 1: the way for a rate high. Do you agree with

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Speaker 1: the UK Treasury their report yesterday that the mod the

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Speaker 1: moderate path is what a three and a half percent

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Speaker 1: hit to UK GDP, a severe shock would be more

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Speaker 1: than six percent hit to g d P and how

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Speaker 1: home prices down tempers. Yeah, So I'm working on the

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Speaker 1: basis that whatever you thought UK growth would be for

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Speaker 1: each of the next five years, kind of take half

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Speaker 1: a percent off that as you're working assumption. So if

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Speaker 1: you thought we were growing at one and three quarters

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Speaker 1: just slowing from two a bit like the US put

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Speaker 1: one on a quarter down, so not less than one,

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Speaker 1: not in a recession, but on average over the next

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Speaker 1: five plus years while we go through this. So that's

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Speaker 1: the right starting point now in that environment, if you

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Speaker 1: you know, I could redo it in the US that

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Speaker 1: the next move in monetary policy is to cut rates,

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Speaker 1: but not immediately. Um so maybe in twenty seventeen, I

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Speaker 1: don't know, but the you know, if I looked at

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Speaker 1: those numbers, I would that that would be my immediate

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Speaker 1: con think, and if the pound were to fall further,

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Speaker 1: I would still cut rates. Frankly, that wouldn't put me off.

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Speaker 1: If I saw slightly higher inflation for a bit, fine,

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Speaker 1: that's the currency acting as a acting as a support

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Speaker 1: for the economy of setting something what's going on making

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Speaker 1: us a little bit more competitive? Nothing wrong with that?

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Speaker 1: So um yes, so that that would be my my

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Speaker 1: working assumption, Kit Jukes, give you about ten seconds. The

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Speaker 1: city of London. What's the mood today? Pretty grim? Pretty grim?

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Speaker 1: But I mean, you know, I mean there was a

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Speaker 1: there was a band playing outside my office and everyone

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Speaker 1: seemed happy. But people I was talking to nervous about

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Speaker 1: you know, what does this mean for jobs? You know

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Speaker 1: we're not We're already bouncing back from the financial crisis

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Speaker 1: now right, Well, Jukes, thank you so very much joining

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Speaker 1: us from ground zero for that UK bregsit vote to

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Speaker 1: pound at its lowest level since when Kit Jukes says

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Speaker 1: he started in the business. He's global strategist at Society General.

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Speaker 1: I'm Caffeine has along with Pim Fox and this is

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Speaker 1: taking stock on Blueberg Radio. Coming up on taking Stock.

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Speaker 1: Will the British Parliament try to foil the Brexit vote?

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Speaker 1: Even after the general election. Most MP's members of Parliament

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Speaker 1: favor remain We've got details ahead