WEBVTT - Cambridge Global Payments' Casey on Brexit, Currencies (Audio)

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<v Speaker 1>Broadcasting live to New York Bloomberg eleventh, Rio to Washington,

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<v Speaker 1>d C. Bloomber to Boston, Bloomberg dwell Under to San Francisco,

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<v Speaker 1>Bloomberg nine to the Country, Shoe is Exam General one

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<v Speaker 1>nine and around the globe the Bloomberg Radio plus Appen

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<v Speaker 1>Bloomberg Got Gone. This is taking stock. I'm Kathleen Hayes

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<v Speaker 1>along with PIM Fox. By Thursday, voters in the UK

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<v Speaker 1>will be going to the polls to vote whether or

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<v Speaker 1>not they should stay or leave the European Union Union.

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<v Speaker 1>The Brexit vote is upon us. Our next guest says

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<v Speaker 1>that even if the vote is to stay and the

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<v Speaker 1>polls are leading in that direction, Pim, as you well know,

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<v Speaker 1>there could be big moves in currency markets as investors

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<v Speaker 1>adgest to that. Yes, we'll also be talking about the

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<v Speaker 1>potential for importing inflation into the United Kingdom. Is indeed

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<v Speaker 1>the UK voters that decided to leave the European Union

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<v Speaker 1>right now, Let's go to Arlie Pello Bloomberg, Bluer Bloomberg

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<v Speaker 1>Business Flat and I thank you him, Thank you Kathleen.

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<v Speaker 1>The dal the SMP Nez dec Hall advancing stocks are surging.

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<v Speaker 1>SMP five hundred index, up the most in four weeks,

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<v Speaker 1>after the latest poll show the UK campaign to remain

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<v Speaker 1>in the European Union is gaining ground ahead of Thursday's referendum.

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<v Speaker 1>Of course, between now and Thursday and Friday, when we

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<v Speaker 1>find out for sure, when we get reaction, count on

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<v Speaker 1>Bloomberg for complete ongoing coverage. Oil is advancing today, extending

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<v Speaker 1>its advance from a one month low last week. Equities rose,

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<v Speaker 1>the dollars slipped on speculation the UK will vote to

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<v Speaker 1>remain in the up A EU. Scott Bower's senior market

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<v Speaker 1>strategistic trading advantage. The oversupply is is kind of gone. There.

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<v Speaker 1>There's a balance now between supply and demand, which is

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<v Speaker 1>what we want to see, and that's what it's been

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<v Speaker 1>shifting to. And that's why we've seen oil you know, rally,

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<v Speaker 1>certainly off the lows that we saw in the mid twenties,

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<v Speaker 1>but really rally off the last you know, month or so,

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<v Speaker 1>and we're seeing high tom and and the prediction is

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<v Speaker 1>now for high demand going into third and fourth quarters

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<v Speaker 1>of this year. And right now West Texas Intermediate accrued

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<v Speaker 1>it is up a dollar thirty five forty nine thirty

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<v Speaker 1>three on w t I, a gain there of two

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<v Speaker 1>point eight percent. Jaguar, land Rover and Diagio have joined

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<v Speaker 1>a growing number of companies warning employees of the risks

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<v Speaker 1>of a withdrawal by the UK from the European Union. Down.

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<v Speaker 1>Industrial is up one seventy nine, a gain narrow of

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<v Speaker 1>one percent. SMP of eighteen a gain of nine tenths

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<v Speaker 1>upon percent, has stack of fifty eight, a gain of

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<v Speaker 1>one point two percent. The tenure down eighteen thirty seconds

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<v Speaker 1>that yield one point six six percent. Gold is down

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<v Speaker 1>two tenths of one percent. Now the other stories making news.

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<v Speaker 1>Thank you Charlie from the Bloomberg News room. I Rainey

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<v Speaker 1>in a cent cio. The FBI has released the transcripts

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<v Speaker 1>from one calls between the Orlando nightclub shooter and police.

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<v Speaker 1>US Attorney Lead Bentley applauded the officers for how they

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<v Speaker 1>handled the standoff. The brave men and women of the

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<v Speaker 1>Orlando Police Department, the Orange County Sheriff solve this. The

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<v Speaker 1>FBI and others should not be second guests. They performed

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<v Speaker 1>valiantly during those early morning hours. Lives were saved because

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<v Speaker 1>of their heroic work. There's a shake up today in

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<v Speaker 1>the Donald Trump campaign. Trump has fired his hard charging

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<v Speaker 1>campaign manager, Corey Lewandowski. He's clashed with longtime political operatives

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<v Speaker 1>who were brought in to make the campaign more professional.

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<v Speaker 1>Parts of southern California saw record highs yesterday and temperatures

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<v Speaker 1>are expected to climb even higher today. Jasmine Casillo changed

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<v Speaker 1>her plans to avoid the heat easily and I'll be

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<v Speaker 1>on a long hike. Can't really do that, so staying

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<v Speaker 1>out of the wilderness for a little bit. Just trying

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<v Speaker 1>to save by the beats and An experimental vaccine for

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<v Speaker 1>the zeke of virus is due to begin human testing

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<v Speaker 1>incoming weeks. In Ovo Pharmaceuticals says it received clearance from

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<v Speaker 1>the FDA to begin early stage safety tests of its

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<v Speaker 1>DNA based vaccine against the mosquito born virus, and the

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<v Speaker 1>program director of the Port Authority of New York and

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<v Speaker 1>New Jersey has received an honorary title from Queen Elizabeth

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<v Speaker 1>Glen Goosey is now an Honorary Member of the Most

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<v Speaker 1>Excellent Order of the British Empire for public service. The

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<v Speaker 1>Journal News says the New Yorker has been taking members

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<v Speaker 1>of the royal family on tours of the World Trade

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<v Speaker 1>Center site for fifteen years. Global news twenty four hours

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<v Speaker 1>a day, powered by our journalists in more than one

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<v Speaker 1>news bureaus around the world. From the Bloomberg Newsroom, I'm

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<v Speaker 1>Rainy in a cenio, Charlie, and we thank you and

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<v Speaker 1>again recapping equities advancing SMP five hundred index climbing nineteen

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<v Speaker 1>points to two thousand ninety, a gain of nine tenths

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<v Speaker 1>of one percent. I'm Charlie Palaton. That's a Bloomberg Business

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<v Speaker 1>slash there on Bloomberg Radio, just underscoring how focused global

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<v Speaker 1>markets are on the Brexit vote. On Thursday, the pound

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<v Speaker 1>jumping the most today since two thousand. It's spring, a

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<v Speaker 1>global rally in higher yielding currencies as the latest polls

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<v Speaker 1>are signaling that the campaign for the UK to stay

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<v Speaker 1>in the European Union is gaining momentum. Joining us now

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<v Speaker 1>here in our New York studio is Steven Casey, FX

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<v Speaker 1>trader and senior market analyst at Cambridge Global Payments. Cambridge

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<v Speaker 1>is the biggest privately owned corporate provider of foreign exchange

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<v Speaker 1>services in the world, part of the burgeoning non bank market.

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<v Speaker 1>He spent many years in London trading currencies. Now back

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<v Speaker 1>in New York the last few years to work for Cambridge.

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<v Speaker 1>Welcome to the show, Stephen. Thank you very much for

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<v Speaker 1>having me. So you worked in London, you must still

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<v Speaker 1>have a lot of buddies on FX trading desks over there.

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<v Speaker 1>What are people saying, not only about the vote but

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<v Speaker 1>citizens Londoners? Well, how are they voting? It's funny. I mean,

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<v Speaker 1>like the polls, Um, it's split. I've got some friends

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<v Speaker 1>who think that it's a foregone conclusion. I've got some

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<v Speaker 1>friends who think that it will never happen. So I

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<v Speaker 1>guess the polls kind of match what my inner circle

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<v Speaker 1>um beliefs as well. Concerning the Brexit, we'll have to

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<v Speaker 1>wait and see. Steven. Do you think that investors are

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<v Speaker 1>really prepared if they put in place any policies or

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<v Speaker 1>any strategy that would foretell what would happen to their

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<v Speaker 1>investments if the UK decides to leave? Um? Well, I

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<v Speaker 1>can only speak for our clients. I don't think that's

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<v Speaker 1>the case. I mean, we've done a good job I

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<v Speaker 1>think of preparing our corporate clients over the last few

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<v Speaker 1>weeks and months of this situation as it sort of

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<v Speaker 1>loomed over the markets. We're trying to make sure everyone's

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<v Speaker 1>kind of prepared for the worst but planning for the best. UM.

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<v Speaker 1>I think the volatility that we've seen over the last

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<v Speaker 1>few weeks really speaks to how nervous the market is

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<v Speaker 1>either way on how this will play out. Well. I

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<v Speaker 1>think it's interesting and the reason you point out to

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<v Speaker 1>us in a note you sent over that the building

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<v Speaker 1>of positions currency positions from bulls and bears suggest while

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<v Speaker 1>pound bulls maybe regaining the upper hand, the uncertain nature

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<v Speaker 1>of the vote will pave the way for large and

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<v Speaker 1>ill liquid moves once the votes of intellige I think

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<v Speaker 1>that's really important. Think a lot of people figure if

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<v Speaker 1>they vote to stay forget about Friday, Friday, even like Thursday,

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<v Speaker 1>this could unleash a lot of turmoil in currency markets. Absolutely,

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<v Speaker 1>you have to wonder about the time of the year.

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<v Speaker 1>It's the summer. Markets have thinned out a little bit,

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<v Speaker 1>desks are half staffed, So even if without the Brexit,

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<v Speaker 1>we would see a little bit ramp up in volatility.

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<v Speaker 1>So UM, despite what happens on Thursday, we should see

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<v Speaker 1>um a little bit of a follow through into early

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<v Speaker 1>next week. On either side, what is the thinking about

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<v Speaker 1>the strength and weakness of the US dollar. Well, the

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<v Speaker 1>dollars kind of had a funny run, and I think

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<v Speaker 1>it's gonna be, um, sort of a choppy trade through

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<v Speaker 1>the summer. You have to remember it's an election year,

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<v Speaker 1>so we've got many different things in play. UM. I

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<v Speaker 1>know that Chairman Yellen will be addressing Congress tomorrow and Wednesday,

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<v Speaker 1>and I expect her to maintain a consistent statement with

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<v Speaker 1>what um the Fed came out with last week. I

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<v Speaker 1>don't think she's gonna try to rock the boat. UM. Sorry, no.

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<v Speaker 1>My My thought process is that over the next few weeks,

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<v Speaker 1>once we do get the Brexit out of the way, UM,

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<v Speaker 1>if we do see market stabilized a little bit, we

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<v Speaker 1>do see oil continue to recover, maybe that should pave

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<v Speaker 1>the way for the Fed to begin to get comfortable

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<v Speaker 1>with maybe a move in September. In that way, we

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<v Speaker 1>could see the dollar catch a bid tone towards the

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<v Speaker 1>end of the cucond point and they want to let

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<v Speaker 1>the dust settle. But what what could she say tomorrow

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<v Speaker 1>that would rock the boat. Jim Buller, president St. Louis Fed,

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<v Speaker 1>rocked the boat a bit on Friday when he revealed

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<v Speaker 1>that he is the forecast for only one rate increase

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<v Speaker 1>now this year, but for the next two years. I

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<v Speaker 1>will Janet Yellen do you think be would you like

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<v Speaker 1>to hear her away on that? What could she say

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<v Speaker 1>or about policy tomorrow that would cause you to buy

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<v Speaker 1>or sell some currencies? Well? I think if she made

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<v Speaker 1>any direct statements to the next meeting in July, if

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<v Speaker 1>she got specific with July or September, I think that

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<v Speaker 1>could cause for some volatility in the short term. UM.

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<v Speaker 1>That's why I think she's going to be more vague

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<v Speaker 1>with her statement. I think she's gonna try to be

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<v Speaker 1>very consistent with with what the committee came out with

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<v Speaker 1>last week and try to avoid locking down UM the

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<v Speaker 1>Fed with anything UM concrete over the next two meetings.

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<v Speaker 1>She's gonna want to leave it open, leave it open.

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<v Speaker 1>What about the Bank of England? You think they're leaving

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<v Speaker 1>it open. You think there's a possibility that Mark Karney,

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<v Speaker 1>the Bank of England, will raise rates before the Federal

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<v Speaker 1>Reserve raises rates. Uh No, I don't. I don't think

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<v Speaker 1>that's all. I like Mark Arney. He did, he did

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<v Speaker 1>an excellent job at the Bank of the Bank of

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<v Speaker 1>Canada and so far he steered the ship in England

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<v Speaker 1>very well. Um, right now, I think it's gonna take

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<v Speaker 1>a little bit of time for um, for for the

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<v Speaker 1>bridge to kind of see how this Brexit either way

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<v Speaker 1>kind of stifts through. And I think in action is

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<v Speaker 1>probably the best action. So you talk you corporate clients.

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<v Speaker 1>What kind of corporate clients do you have, and what

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<v Speaker 1>is there? What is their fear, what is their hope

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<v Speaker 1>in all of this? Well, their fear is their hope

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<v Speaker 1>is probably for a little bit of a non event.

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<v Speaker 1>I mean, most of our clients here in the US

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<v Speaker 1>are buyers of f X, their buyers of Euros, buyers

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<v Speaker 1>of stone, and they're hedging that direction. So um, you know,

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<v Speaker 1>I was just reading the op ed that Muhammad Alarian

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<v Speaker 1>wrote this morning and blew Burg noting that we could

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<v Speaker 1>see a seven seven to ten percent drop in Sterling,

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<v Speaker 1>maybe a three to five percent drop in the euro

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<v Speaker 1>should the brexit go through. I think that's their biggest fear,

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<v Speaker 1>you know, overheaging or maybe putting themselves in a position

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<v Speaker 1>to to miss that move where they're jumping in it

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<v Speaker 1>and one twelve in the euro and then we're resetting

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<v Speaker 1>midweek next week around one oh five in the euro

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<v Speaker 1>and maybe as low as one thirty five in the pound,

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<v Speaker 1>So that's kind of their biggest fear. You don't share

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<v Speaker 1>that fear at the moment right now. I don't think

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<v Speaker 1>it's gonna go through. UM. I didn't think it had

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<v Speaker 1>a great job of going through before what happened last

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<v Speaker 1>week with with Joe Cox. I know that the sentiment

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<v Speaker 1>has kind of shifted to back the remain vote. UM.

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<v Speaker 1>But you know, if you look at these referendums historically,

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<v Speaker 1>you're gonna need to see that the under side with

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<v Speaker 1>about a six or seven percent raise before we see

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<v Speaker 1>the uh, the vocal through. Thank you very much, Stephen

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<v Speaker 1>Casey for x Trader, Senior Market Analyst, Cambridge Global Payments.

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