1 00:00:03,160 --> 00:00:07,760 Speaker 1: Broadcasting live to New York, Bloomberg even to Washington, d C, 2 00:00:07,960 --> 00:00:13,240 Speaker 1: Bloomberg to Boston, Bloomberg twelve under to San Francisco, Bloomberg 3 00:00:14,080 --> 00:00:17,680 Speaker 1: to the countries is at JAM General one, and around 4 00:00:17,720 --> 00:00:21,040 Speaker 1: the globe the Bloomberg Radio plus dav and Bloomberg got gone. 5 00:00:21,400 --> 00:00:26,640 Speaker 1: This is taking stock the battle for Britain's future. Our 6 00:00:26,760 --> 00:00:29,600 Speaker 1: next guest says that departs are of the United Kingdom 7 00:00:29,640 --> 00:00:33,559 Speaker 1: from the European Union could trigger a panic for financial markets. 8 00:00:34,080 --> 00:00:37,319 Speaker 1: We've got details. That's all coming up. Hal Scott's he's 9 00:00:37,320 --> 00:00:40,839 Speaker 1: a Harvard law professor, an expert on international finance and 10 00:00:40,960 --> 00:00:44,360 Speaker 1: securities regulation. We must hear what he has to say 11 00:00:44,440 --> 00:00:47,920 Speaker 1: because the leave vote once again is looking stronger in 12 00:00:47,960 --> 00:00:51,080 Speaker 1: the latest polls from the UK. Let's get back to 13 00:00:51,159 --> 00:00:53,280 Speaker 1: Charlie Pellett. Now he's in the newsroom of the polemic 14 00:00:53,360 --> 00:00:55,520 Speaker 1: Business Flash and I think you very much, Kathleen. We 15 00:00:55,560 --> 00:00:59,680 Speaker 1: are brought to you by the American Arbitration Association International 16 00:00:59,680 --> 00:01:03,320 Speaker 1: Trade to our business dispute Resolve Faster with the International 17 00:01:03,360 --> 00:01:07,720 Speaker 1: Center for Dispute Resolution, the leader in alternative dispute resolution 18 00:01:07,800 --> 00:01:10,920 Speaker 1: around the world. I see d R dot org. Now 19 00:01:11,000 --> 00:01:14,760 Speaker 1: the developing story Platinum Partners offices being rated by federal 20 00:01:14,760 --> 00:01:18,240 Speaker 1: agents looking into the hedge funds operations after a manager 21 00:01:18,319 --> 00:01:20,640 Speaker 1: at the firm was charged this month with bribing a 22 00:01:20,880 --> 00:01:23,920 Speaker 1: union chief. This according to a person familiar with the matter. 23 00:01:24,319 --> 00:01:27,880 Speaker 1: Agents from the FBI and the US Postal Inspection Service 24 00:01:27,920 --> 00:01:31,840 Speaker 1: were at Platinum's offices in Midtown Manhattan this morning. According 25 00:01:31,840 --> 00:01:34,360 Speaker 1: to the person who says the rate is separate from 26 00:01:34,400 --> 00:01:38,800 Speaker 1: the bribery probe, stocks are fluctuating light volume amid fragile 27 00:01:38,840 --> 00:01:41,880 Speaker 1: sentiment as Trader's way. The probability of the UK voting 28 00:01:41,920 --> 00:01:44,960 Speaker 1: to remain in the European Union a day ahead of 29 00:01:44,959 --> 00:01:48,640 Speaker 1: the referendum, an early climb for equities lost momentum after 30 00:01:48,720 --> 00:01:52,760 Speaker 1: Brexit polls released today quelled optimism. John Writing is chief 31 00:01:52,760 --> 00:02:00,880 Speaker 1: economist at r d Q Economics. Well Shirley Brexit vote 32 00:02:01,000 --> 00:02:05,240 Speaker 1: is not about economic policies, much more about immigration and 33 00:02:05,440 --> 00:02:08,560 Speaker 1: uh something that there's been Uh there is, I suppose 34 00:02:08,600 --> 00:02:13,880 Speaker 1: in the English British psychea a deep seated distrust of 35 00:02:13,880 --> 00:02:17,040 Speaker 1: of Europe. Fed X falling the most in five months 36 00:02:17,120 --> 00:02:20,720 Speaker 1: after disappointing investors by not providing more specifics on how 37 00:02:20,760 --> 00:02:24,040 Speaker 1: the four point eight billion dollar acquisition of Dutch shipping 38 00:02:24,040 --> 00:02:28,040 Speaker 1: company t n T Express will affect earnings fed X 39 00:02:28,120 --> 00:02:31,320 Speaker 1: down four point one percent, as MP lore by two 40 00:02:31,360 --> 00:02:33,160 Speaker 1: to two thousand and eighty six or dropped there a 41 00:02:33,240 --> 00:02:36,720 Speaker 1: point one percent, Gold down five twenty ounce to twelve 42 00:02:36,840 --> 00:02:40,080 Speaker 1: sixty seven to drop also of point four percent and 43 00:02:40,200 --> 00:02:42,200 Speaker 1: three thirty two on Wall Street. Now we'll look at 44 00:02:42,200 --> 00:02:46,120 Speaker 1: other news from around the world. Charlie, Thank you from 45 00:02:46,160 --> 00:02:49,200 Speaker 1: the Bloomberg news room. I Mark Crumpton. This news update 46 00:02:49,280 --> 00:02:51,680 Speaker 1: is brought to you by the Jeep Grand Cherokee, the 47 00:02:51,720 --> 00:02:55,960 Speaker 1: most awarded suv ever. The Grand Cherokee continues to raise 48 00:02:56,040 --> 00:02:59,960 Speaker 1: the bar with its luxurious interior and legendary four by 49 00:03:00,160 --> 00:03:03,920 Speaker 1: for capability Drive one at our local jeep dealer. Today, 50 00:03:04,400 --> 00:03:07,880 Speaker 1: campaigners pressed their eleventh hour appeals a day before the 51 00:03:08,000 --> 00:03:11,880 Speaker 1: UK's landmark vote on membership in the European Union. The 52 00:03:11,960 --> 00:03:15,359 Speaker 1: latest Opinion polls showed rival camps neck and Neck. An 53 00:03:15,400 --> 00:03:19,280 Speaker 1: online survey published by Opinion showed what the company called 54 00:03:19,280 --> 00:03:23,359 Speaker 1: a statistical dead heat, with forty percent of respondents for 55 00:03:23,480 --> 00:03:28,080 Speaker 1: leave and for remain. More than a week after the 56 00:03:28,200 --> 00:03:31,959 Speaker 1: mass shooting in Orlando, Florida, Governor Rick Scott is calling 57 00:03:32,000 --> 00:03:35,360 Speaker 1: for more support of local businesses near the Pulse nightclub 58 00:03:35,560 --> 00:03:38,000 Speaker 1: that have lost revenue. We gotta get her, get these 59 00:03:38,000 --> 00:03:40,160 Speaker 1: businesses back to work so they can continue to employ 60 00:03:40,240 --> 00:03:43,040 Speaker 1: the business of the people that that that they employ 61 00:03:43,080 --> 00:03:46,760 Speaker 1: every day. House Speaker Paul Ryan joined fellow Republicans to 62 00:03:46,920 --> 00:03:50,600 Speaker 1: unveil more of the House GOP's agenda. Speaker Ryan says 63 00:03:50,640 --> 00:03:54,280 Speaker 1: replacing Obamacare is an area where they have been working 64 00:03:54,320 --> 00:03:57,200 Speaker 1: on for some time. There are some longstanding principles you 65 00:03:57,200 --> 00:04:00,120 Speaker 1: will see advanced. But what you're seeing today is the 66 00:04:00,160 --> 00:04:04,600 Speaker 1: consensus by House Republicans on the best way to replace Obamacare, 67 00:04:04,640 --> 00:04:07,240 Speaker 1: and that is a very important achievement in and of itself. 68 00:04:07,720 --> 00:04:11,240 Speaker 1: Also on Capitol Hill, rebellious House Democrats shut down the 69 00:04:11,320 --> 00:04:14,720 Speaker 1: chambers legislative work today, staging a sid in on the 70 00:04:14,760 --> 00:04:17,880 Speaker 1: House floor and refusing to leave until they secured a 71 00:04:17,960 --> 00:04:21,440 Speaker 1: vote on gun control. Global News twenty four hours a day, 72 00:04:21,640 --> 00:04:25,360 Speaker 1: powered by more than journalists and analysts and more than 73 00:04:25,400 --> 00:04:28,440 Speaker 1: one d twenty countries From the Bloomberg News Room. I'm 74 00:04:28,440 --> 00:04:32,680 Speaker 1: Mark Crumpton, Charlie, and we thank you again. Recapping equities 75 00:04:32,760 --> 00:04:35,359 Speaker 1: lower twenty six minutes ago ahead of the close the 76 00:04:35,520 --> 00:04:38,560 Speaker 1: SMP five hundred index down two points to two thousand 77 00:04:38,600 --> 00:04:41,520 Speaker 1: and eighty six, a drop of one tenth of one percent. 78 00:04:42,000 --> 00:04:46,960 Speaker 1: I'm Charlie Palaton. That's a Bloomberg Business flash the Brexit 79 00:04:47,080 --> 00:04:55,400 Speaker 1: vote on Bloomberg Radio Brexit. If the UK does decide, 80 00:04:55,520 --> 00:04:59,479 Speaker 1: does vote to leave the European Union, what will it 81 00:04:59,640 --> 00:05:03,720 Speaker 1: mean for financial markets? Our next guest says it could 82 00:05:03,760 --> 00:05:07,800 Speaker 1: trigger a panic similar what took place after the collapse 83 00:05:07,920 --> 00:05:10,440 Speaker 1: of leban Brothers. Let's get right to how Scott, now 84 00:05:10,760 --> 00:05:14,520 Speaker 1: professor at the Harvard Law School and someone who has 85 00:05:14,720 --> 00:05:19,200 Speaker 1: written and been quoted and listened to UH in great, 86 00:05:20,000 --> 00:05:24,160 Speaker 1: great depth on the US financial crisis. So we're very 87 00:05:24,160 --> 00:05:25,640 Speaker 1: eager to hear what he has to say about what 88 00:05:25,720 --> 00:05:28,400 Speaker 1: could be triggered by europe. How welcome back to the show. 89 00:05:29,520 --> 00:05:33,960 Speaker 1: Very much so, UH, an expert on capital markets regulation, 90 00:05:34,200 --> 00:05:38,480 Speaker 1: author of a new book that's coming out Connectingness and Contagion. 91 00:05:38,600 --> 00:05:41,719 Speaker 1: What is the contagion that could go from this vote 92 00:05:41,720 --> 00:05:45,680 Speaker 1: to the markets? Well, let me start by saying, I 93 00:05:45,720 --> 00:05:50,760 Speaker 1: think the probability of having women repead or compasion or 94 00:05:51,160 --> 00:05:55,240 Speaker 1: very very low. UH. Nonetheless, if it does occur to 95 00:05:55,440 --> 00:05:57,800 Speaker 1: all have a very high impact. So we need to 96 00:05:57,800 --> 00:06:02,280 Speaker 1: worry about it. It's just um. A contagion is basically 97 00:06:02,520 --> 00:06:06,520 Speaker 1: something that there's an irrational panic of the steer of 98 00:06:06,600 --> 00:06:08,960 Speaker 1: the unknown. I mean what happened with women as there 99 00:06:09,000 --> 00:06:12,760 Speaker 1: was a shock to the system. No large finance institution 100 00:06:12,839 --> 00:06:15,240 Speaker 1: can fail. Look at what we do with there. That's 101 00:06:15,279 --> 00:06:17,960 Speaker 1: not going to happen. And it did happen, and that 102 00:06:18,560 --> 00:06:22,200 Speaker 1: sent people rushing to the exits short term funding withdrawing 103 00:06:22,320 --> 00:06:27,560 Speaker 1: from banks and importantly non banks when money market funds, etcetera. Uh, 104 00:06:27,680 --> 00:06:30,720 Speaker 1: no short term funding available in the market. That was 105 00:06:30,839 --> 00:06:34,200 Speaker 1: the heart of the financial crisis in two thousand and eight. 106 00:06:34,680 --> 00:06:38,120 Speaker 1: So you never know when something like this can happen. 107 00:06:38,440 --> 00:06:42,680 Speaker 1: And if there were a pullout, um, it could. It 108 00:06:42,720 --> 00:06:44,640 Speaker 1: could be a shock and people said, I don't know 109 00:06:44,680 --> 00:06:47,000 Speaker 1: what's going to happen next. Uh, I'm going to get 110 00:06:47,040 --> 00:06:49,919 Speaker 1: my money out of banks or non banks. Hopefully that 111 00:06:50,000 --> 00:06:55,000 Speaker 1: never happens, but it has in the past. Professor Scott, 112 00:06:55,000 --> 00:06:58,200 Speaker 1: I'm wondering if you could draw on your experience in 113 00:06:58,360 --> 00:07:04,440 Speaker 1: capital markets regulation and speak perhaps about, well, what happens 114 00:07:04,440 --> 00:07:08,919 Speaker 1: on Friday, if indeed the United Kingdom votes to stay 115 00:07:09,040 --> 00:07:13,320 Speaker 1: in the European Union, will we see a different kind 116 00:07:13,360 --> 00:07:18,400 Speaker 1: of capital market structure in Europe. I don't think so. Um, 117 00:07:18,440 --> 00:07:22,600 Speaker 1: you know, our Europe has been working at um improving 118 00:07:22,640 --> 00:07:26,520 Speaker 1: their internal market. Uh, they have a big program to 119 00:07:26,560 --> 00:07:29,400 Speaker 1: do that. But you know, the fact of the matter 120 00:07:29,760 --> 00:07:33,840 Speaker 1: is that what integrates the financial markets in Europe is London. 121 00:07:34,600 --> 00:07:39,040 Speaker 1: London is the key to Europe's financial markets. So that's 122 00:07:39,080 --> 00:07:41,680 Speaker 1: gonna continue to be I mean, I think that's what 123 00:07:41,720 --> 00:07:44,920 Speaker 1: people are worried about. If London gets out, where will 124 00:07:45,320 --> 00:07:49,440 Speaker 1: the center of financial markets in Europe? Well, how this 125 00:07:49,600 --> 00:07:53,040 Speaker 1: is you touch on a point that is not about 126 00:07:53,080 --> 00:07:56,160 Speaker 1: panic and it's not about Brexit in crisis. It's also 127 00:07:56,240 --> 00:07:59,720 Speaker 1: about the EU and certainly the euro Area. I guess 128 00:07:59,760 --> 00:08:03,760 Speaker 1: that's what I'm referring to. That the ability to integrate 129 00:08:03,760 --> 00:08:07,600 Speaker 1: the banks in terms of bailing out grease or you know, 130 00:08:08,200 --> 00:08:12,720 Speaker 1: across the the area has been limited. Uh. Is there 131 00:08:12,760 --> 00:08:15,480 Speaker 1: any argument that you can see from a financial standpoint 132 00:08:15,560 --> 00:08:18,400 Speaker 1: at all for the UK to leave? Is there any 133 00:08:18,480 --> 00:08:21,600 Speaker 1: benefit they would get from, you know, being outside the 134 00:08:21,640 --> 00:08:25,480 Speaker 1: EU parameters but still maybe somehow able to remain the 135 00:08:25,520 --> 00:08:28,320 Speaker 1: center of finance in Europe. Well, as you know, they're 136 00:08:28,360 --> 00:08:30,760 Speaker 1: not part of the euro so they don't need to 137 00:08:30,760 --> 00:08:33,319 Speaker 1: get out of the EU. That of the Euro, they 138 00:08:33,320 --> 00:08:36,520 Speaker 1: have their own currency, uh, and they've been able to 139 00:08:36,600 --> 00:08:39,920 Speaker 1: operate as the center of financial markets in the EU 140 00:08:40,360 --> 00:08:43,600 Speaker 1: even with their own currency. So that give you, uh, 141 00:08:43,679 --> 00:08:47,680 Speaker 1: you know, some um insight into how important UK financial 142 00:08:47,720 --> 00:08:53,440 Speaker 1: markets are. UM. So I think that you know, if 143 00:08:53,520 --> 00:08:58,400 Speaker 1: they what they're what they're concerned about is the level 144 00:08:58,480 --> 00:09:03,880 Speaker 1: of European regulation and um it's very high. It's very bureaucratic, 145 00:09:04,800 --> 00:09:07,960 Speaker 1: um and they have to deal with it. So a 146 00:09:08,000 --> 00:09:11,280 Speaker 1: big argument for weave is we get rid of these 147 00:09:11,280 --> 00:09:14,120 Speaker 1: pointy head you know, guys on the continent that are 148 00:09:14,760 --> 00:09:18,040 Speaker 1: interfering on our free markets in the UK. I think 149 00:09:18,080 --> 00:09:20,520 Speaker 1: it's totally ex aderated by the way. I think both 150 00:09:20,559 --> 00:09:23,600 Speaker 1: sides are totally ex entering their consequences of a vote 151 00:09:23,600 --> 00:09:26,560 Speaker 1: here because they want to win the vote. But I 152 00:09:26,600 --> 00:09:29,679 Speaker 1: think there is you know, something to be said that 153 00:09:30,000 --> 00:09:32,920 Speaker 1: the UK, by getting out of the EU would be 154 00:09:33,000 --> 00:09:36,880 Speaker 1: free of some forms of financial regulation. But on the 155 00:09:36,920 --> 00:09:43,440 Speaker 1: other side, trade wise, um, I think uh, politically wise 156 00:09:44,240 --> 00:09:48,640 Speaker 1: good beople very bad for him, Tolly. Professor Scott, I'm 157 00:09:48,720 --> 00:09:51,600 Speaker 1: gonna try to draw you on on an unrelated topic 158 00:09:51,640 --> 00:09:54,760 Speaker 1: that has to do with negative interest rates. In Europe. 159 00:09:55,679 --> 00:09:59,320 Speaker 1: Have you ever experienced negative interest rates? And what do 160 00:09:59,320 --> 00:10:04,720 Speaker 1: you make of them? I've never experienced Sometimes god um 161 00:10:04,800 --> 00:10:10,599 Speaker 1: uh you know, um it's one thing for um, the 162 00:10:10,760 --> 00:10:14,079 Speaker 1: stead or potettos and actually doing I would say the 163 00:10:14,160 --> 00:10:17,440 Speaker 1: Bank of Japan to say to a bank, you know, 164 00:10:17,480 --> 00:10:20,360 Speaker 1: if you want to park money here, um, you may 165 00:10:20,400 --> 00:10:22,839 Speaker 1: have to pay us to kick um. You know, it's 166 00:10:22,880 --> 00:10:27,840 Speaker 1: just between the Bank of Japan and h Bank. Where 167 00:10:27,840 --> 00:10:30,920 Speaker 1: it gets a little dicey is when that bank who's 168 00:10:30,960 --> 00:10:33,679 Speaker 1: now paying the Bank of Japan to keep their money 169 00:10:33,720 --> 00:10:40,040 Speaker 1: there sort of you're still with me here, Well, we 170 00:10:40,120 --> 00:10:43,120 Speaker 1: go ahead and give you two seconds. Okay, it gets 171 00:10:43,320 --> 00:10:45,680 Speaker 1: icy if they tell me that I have to pay 172 00:10:45,720 --> 00:10:48,280 Speaker 1: a bank to keep my money with them, I'm gonna 173 00:10:48,320 --> 00:10:50,679 Speaker 1: take it out of that back. Thank you very much. 174 00:10:50,720 --> 00:10:54,760 Speaker 1: How Scott professor of Harvard Law School, joining us from Boston. 175 00:10:54,880 --> 00:11:02,319 Speaker 1: This is Bloomberg Radio. The Big Vote on breakfast, will 176 00:11:02,360 --> 00:11:05,400 Speaker 1: the UK vote to leave the European Union and what 177 00:11:05,520 --> 00:11:08,720 Speaker 1: our stock markets braced for? And once we get past 178 00:11:08,720 --> 00:11:11,679 Speaker 1: the vote, what should you be focused on? That's coming 179 00:11:11,760 --> 00:11:13,079 Speaker 1: up now on Bloomberg Radio.