votes to leave brexit brexit triggers world recession fears and the bank of england says it's ready to provide a $250,000 funds to provide money in extra liquidity. this is "bloomberg surveillance" with tom keene on this historic day. sthfs 2008, tom.

tom: right. an extraordinary day. and to describe how the building went silent this morning as the prime minister esigned was just indescribable. what are you going to try to accomplish in the next few hours? see ine: i'm just going to tom: and as he said, we're just going to try to get through friday. francine:here we are with more results. >> thank you, fran. stay with with that historic vote. they voted the quit the european union after more than four deck decades. setting the u.k. up for years

of bitter the divorce talks. and prime minister david cameron thread main campaign and said he is resigning and a new prime minister will be in office by october. >> i think the country requires fresh leadership to take it in this direction. i will do everything i can as prime minister to steady the ship over the coming weeks and months, but i do not think it would be right for me to be the captain that steers this country to its next destination. d another says the -- he promises there are additional measures the boe can take.

and donald trump is hitting the olf course today in london and the opening of the luxury golf reescort, trump spent $300,000 i69ing -- this is bloomberg. back to tom. tom: thank you. our goal so give you perspective on this history-making day. we have many leaders from the united kingdom speaking to us this hour. the data 3459ers this morning. futures are down this morning. they are not down like they were a year ago, tenure has come back a little bit. euro, much easier now that i'm

in it and dollar centric is lower there. f you would, trading your -- it's way above average and this is one of my major messages of the morning. we are not out except for sterling of 2007-2008 stress. terling 138 nigh lynn, and that will be my chart of the day. >> asian stocks tumbling. it's clear also just because markets were positioned -- i guess i'm not sure how that happens. because it said as 27.1% up. tom: yes. we are going to frame

short-term jai rations. we have a lot of charts for you. our team has been working on it throughout night. this is sterling. we've shown this except now we are moving. we've gone way through the regressions. at one point we were at 3.5 down standard deviations and we've got different shots and we are talking about getting through that circumstanceals. you don't know what the market will look like post brexit. but this is not the year or decades. it's pounds. you can see how it was crushing financial -- i know there's a safety blanke frep boe but you can see the panic as traders start to an lies the results at 20%.

there is k at it as a benefit to the weaker pound. there's a lot of ambiguities right now. as trichet would say, we are brutal. hat was a great interview. francine: it's always great to have you here because you're one of the smartest guys in the city. o what do you see? >> the city believed the momentum and the polls. t believed i believe with some background, but it clearly has not happened in this case. so this is an exceptional

thing. and i think part of the movement you're seeing today is because people have protection in place through sterling volatility. they took it off and have been it now. th tom: i want to link in g.d.p. dynamics, clearly weaker, and he follow-on which is a must -higher inflation. are we at a point where we get higher inflation without the benefits of a higher animal? >> i'm less sure about the inflation point. yes, the u.k., a lot of the inflation is through the currency line. that's what has been driving inflation is the growth and

wage and growth. so there's a substantial shock here that unemployment rises and demand falls. i think the bank is right. the bank is putting on financial stability at first, second and third. it can worry about things down the track. really, it's below that line. and the volatility is enormous. we have is point reporters trying to bring us the latest. francine: there is an release ssued. up coming about central banks. should they come together and issue a statement? >> i think if the world

economic outlook zarkens materially, leading from this point. i wouldn't expect today that tral banks against their domestic constituencies. tom: and morgan stanley and ellen set they are in said the idea of tipping toward global recession. let's go to bob cinch of ambers, i want to get your feel on this. this is a great quote with his decades of experience in the sint sis of all that is going on. e states --

>> there's a shock this morning. so you clear the markets with what? >> i get what he says. but in the next 18 months, 90% of euro g.d.p. goes to the polls. you've got elections for 90% and the popler policies that ie in the u.k. o you can see really a kind of unraveling of the german tightness and -- tom: what's the date on the calendar say? francine: we are already seeing we can't underestimate -- cameron saying he will resign in october and we are expecting

to hear from boris johnson but it's not clear he will be the e after david cameron and we will be talking to our next guests about scottish entertainment and what happened in the brexit vote. ♪

francine: what comes next we will have to see. francine lacqua with tom keene, the first minister of scotland, alex salmond joins us. first will scotland try a referendum and/or try to leave?

alex: well they asked for a which is the last biggest mandate and scotland and every other decisively bought to -- this is what makes another scottish referendum inevitable. tom: so i thought a beautiful short piece in the london cogent about leaving. obviously, you're going to push back about that but what's the action list for you people to amend or soften the negotiations of the next two years? alex: well i think what we are going to find is the one politician in new zealand and thought this through is the one person who has gained us in and knows exactly what to do. i believe she will see a

mandate and engage in direct negotiations with the sabermetricians. one scenario will be where they never exited. i'm not certain they will have the ability to stop that. and also, of course, among the many potential prime ministers, one of two of which said they would not -- tom: excuse me, i'm not up to speed on the politics but is many -- alex: i was exactly in that position as first minister of scotland in 2013. you have to choice but to resign under these circumstances, and that was the right thing to do. francine: how do you see them

over the next few years? ex: i think it is the only option but we will have the option now of our own currency and there are many countries in europe that make a success out of this. francine: will it not feel as lonely outside the u.k.? alex: not half as lonely. francine: hold on, given the price of oil if you don't join them? >> well, oil at $50, every one of these countries would rather have it than not drive. more than twice our own rimpletes for the next 50 years. tom: alex, when i look at scotland and what you're in,

there are a few scottish members of the labour party. mr. darling. mr. brown as well as ores, were you surprised at the disarray of labor last night? lex: well mr. darling is known in theous of lords and they have lost an electoral beast. any of these working class areas, nicholas star gin carried them were as remains as -- >> i sat the four of you last night watching the -- two of the major in, and i was fascinated as labor as a party almost convince lent to the challenges of the republican party in the united states. where does labor go? >> i can promise you -- but

nonetheless the comparison to the leadership of labor, if you make that a special candidate, the republicans has a great deal of difficulties connecting to some of their traditional bases. francine: very understated donald trump was for brexit. is there a linkage between what will happen with brexit and hat will happen in the u.s.? alex: well there's a link in terms of there's a huge disfaction of the establishment is a iticians but the s&p fully-integrational platform. we get the platform of having people coming to work and to contribute to a nation a bit like america, sadly one said

nd to build such a fantastic one whose the mother twont the u.s. and got a fantastic welcome in this wonderful country of yours. francine: the former first scotland, alex salmond, thank you. and this is the picture for a lot of these banks. cent down 20 pounds per and their 2350u67 outside the e.u. ♪

francine: a very historic day as the u.k. voted to quit the european union in a stunning rejection of the post war political and non-political situation and markets plunging, the euro down, pounds getting battered. let's get straight to the finance minister. thank you so much for joining us. are you afraid that the freedom party will ask for a referendum in austria? historicical moment

-- it's o one will probably not to expect there's something like a domino effect in other european countries. joerg schelling, what do you need to hear to settle nerves in your country? hans:that they have the ability to secure instability if needed and the neighboring bank of england, they will also provide to the market if necessary. so i think what we see this orning the turbulence is under category in, my opinion we have

seen this so many times i'm will ve the ragsal u.k. endaughter and we will come through -- francine: this is first time we are seeing such losses. lehman moment? hans: i'm not expecting some w financial crisis because only one ng sit the thing. so it's easy to hand al financial situation for union member states and i think it would be much more dangerous if the united kingdomed that euro as the currency. so therefore, i think that it's a decision which damage is primary thirty united kingdom

i also the european -- think for the next two years the united kingdom will be remembered and after wards conflicts like we have conflicts withor countries but the situation has to be seen as it is and we have to respect this vote and this referendum. francine: thank you so much hans. on the phone from vienna. as we were talking to the austrian minister of finance you can see things getting worse. more when we come back. ♪

>> yes, it will send a shock wave through the european union, but i think ultimately it will be a good thing.

francine: tom, of course we have been looking at the markets and the e.c.u. saying it's quick to provide lick ithty and in close contact with a little bit of this. but they have been planning so it -- tom: the skie key distinction is we're seeing 2 1/2-3 or 3 1/2 standard deviation moves and these are not standard moves. it has a different feel, a better feel to it than what we saw in those true panics. francine: we probably have a better feel because of 2008. so we understand at least the banking sector is not systemic or seems to be based on a better situation.

staying with the news on e.u.'s vote to stay in brexit have have 52% ecide to leave the e.u. analysts say it will not be -- enough to work tout ork out the things and 2k5eu6ed cameron steps down. >> this is not a decision i've taken lightly but i do believe national interest to do this. my view we should aim to have a new prime minister in place by the start of the third-party conference.

delivering duties,ly continue for the next three months. >> among the potential replacements, boris johnson. a crowd was outside his london ome when he left this morning. meanwhile, the bank of england is ready to come to the rescue. boe governor mark conte said it can pump an extra $345 billion into the system and promises there are different measures they can take if needed and the pound dropped to a deckered row . the s&p said with up ward pressure on the swiss franc, -- more than 120 countries, i'm emma chandra.

you're watching bloomberg. francine: thank you chandra. wesk look thagget move into safety and we know many are in crisis mode locking themselves in emergency meetings across china. and also giving a news conference. this plays right into her hands. we don't know if this will trigger more referendums across urope but for more mario monti , former prime minister of italy. mr. monti, thank you. is this a worst-case scenario for the political elite in europe? will this lead to a more fractured europe? mario: it more leads to a more fractured europe. must say that even "u.k.

cided to remain, the all two and given in february to the would in the u.k. leads us to :and say we, too, would like you to to the central bank. and obviously much worse if the u.k. than european union. i believe you pay in seeing how long and adventurous would be the streets, the road towards agreements we have had with part of the e.u. and how week

its economic destination policies would be. i see one, just one. but big, positive to all this trouble. and for the first time it's very, very clear to everybody that you cannot play games with europe. without running serious risks. om: dr. monti, you were at yale university studying under james tobin. is this the moment where we change dialogue and italy's -- are y and the united we changing the policy and decision making on fiscal austerity? >> well, as far as i see, the

thought has to change a little bit in the sense that austerity first, first of all is a world without sense. i never use it. but fiscal discipline has to stay. we need, in italy, we have paid huge prices in the last decades for not sticking to fiscal discipline. but we need to change the mind of the germans, and it is not impossible. believe me. by first persuading them that serious, genuine, public sector investment is not a violation of fiscal discipline. this is the only change, which is really needed. francine: can we take a step back. what exactly does this historic moment mean? is this just the beginning of the end of the european project? it?we going see

mario: it is possible that it could be the end but to me the st serious risk of unraveling, the nation of leaders. all of within time times. you you were up and participating in the top priority the electoral results or even the public opinion polls next week. and we cannot expect europe to be able to take the -- make the right decisions when the most important european council is filled with persons like this. so i believe catastrophe triggered by mr. cameron showing that indeed you can be inflict huge pains if you play these games, may bring more

wisdom or a sense of esponsibility to the others. tom: right now in paris, you were a measured influence on the government of finishing right now in paris it. we will leave that right now, but 23 there's going to be a more 23r5b8g chouse politics, mean?oes that mario: well, that the e.u. will be even more at the center of he domestic debate, and in italy, as in other countries, and i believe it will be very important to try and explain europe better. the mportant to mask cynical game played by so many

domestic politicians in all will use it for the countries' inabilities at home. so there's enough to change in mean, politics has to become more serious. it's ads simple as that, if we want europe to floorish. for example, they called red to lose this german elections, which he did inrder to introduce the euro. and where are the politicians today that would be ready to do something like that? francine: yes. it's extremely difficult to find and difficult to see exactly where you see energy and i guess the will to renegotiate in something that seems well balanced. now, this is a picture for the

banks. we've seen a lot of these banks this is a picture from deutsche and this is a picture from barclays. you can see the movement was brutal and hsbc probably one of the best performing banks and barclay off of today's lows. still down 16%. ♪

tom: the correlations between markets. >> ability, economy. >> the -- tom: good morning, everyone. francine lacqua and tom keene in london. an extraordinary moment as finance meets up with economics. and definitely meets up with politics. ladies, crushed. i rarely use that word. down 21%. barclays crushed.

it's as if it's a one-day bear rket system of a beleaguered european union. we have turned it, "bloomberg surveillance" through good times and bad. crafere wheeler with atlantic equities. that means he has actually cashed pay checks from big banks. he knows what he is talking about. you and i know we have never seen anything like this. i'm going to ask you this question. every banker will tell you for liquidity and solvens cri for banks, i don't buy that. there's a point with your tangible book comes down where it matters. are we there right now? >> no. it's all about liquidity and capital at the moment. it's turned around uncertainty

and how we can operate in this new environment. tom: will they do that with mergers and -- remember when it looked like a three-ring circus? francine: are we sure they are safe? chris: i was up last night looking at the u.s. and how strong those banks are and how much stronger they were before european sis and banks may be not as prepared but be long on liquidity when we go into this vote. that's what i think the situation was for all the banks. and -- tom: legitimate jargon for banks and how they make money. compressed are down into negative lower yields.

, it continues to put down plus as a key component. layoffs?is there francine: we heard from credit suisse saying we are looking at the situation. so how do they respond to a new lower net. not just larger. but whew see is the bank saying we've got to manage without those leg raises for us now. but in the meantime we've got to nang cost and boost the time if we can. which is difficult. francine: this is i guess the lead into the dark because we don't know yet what the end game will be for trades. so what does it mean to you? first of all, interest rates are off the table so how much

does that help or hurt banks right now? >> most banks have got capital structures that are 90 debt and 10% equity. so what's happening in the business world and balance sheets multiplies or divides hugely at the equity level. so it's sensible. although i would because ewan credit's got -- i'm -- ladies that be biggest-growing lender in the past this one. they are not really -- they were thinking about appointing -- >> because of the way regulator works now and essentially asking you to put up more capital to do the merger, the merger route doesn't work. tom: chris, you're the expert on this, what's the escape for the banks if they don't have

the merger en route? chris: i think it's a matter of hunkering down and doing what we said, cutting costs, focusing on the businesses where you had the most profitability and playing the digital game as well. tom: i just want to make clear, francine lacqua, you are way out front, six months ago we're in davos and she's going blah, blah, blah and i'm going, have another drink. but you were dead-on about this. where does lonched city go this morning, chris wiehler? or do they stay here? which is my theory. where do the 3w0dies go? chris: the bodies go to frankfurt or dublin or the end, as i said, and --

city is not going to lose, but a lot of that is going to be a leaching over ooh long period of time. tom: chris, thank you so much. greatly appreciate you coming in. we will have special coverage this w50eked across all of bloomberg tv, news and radio. a lot of re-thinking as we go to monday. maybe ntioned it was more important, nothing, since this friday. this will be at 9:00 a.m. saturday and a little bit later from london, "bloomberg surveillance." ♪

tom: francine lacqua and tom keene up in london. in the north, mr. trump used the trump helicopter. and seriously, mr. trump at his golf course in scotland, which i'm told is beautiful.

there's a sharp article in "the washington post" and washington times in this. francine: so he released a statement saying the brexit vote is a great thing. he said it's an amazing vote because voters are angry. they took back their country, and that's a great thing. so he is continuing basically his primaries right here in scotland and it ties back to what we heard from martin of the national front saying it lends legitimacy to her very own campaign. tom: i think many will be interested as to how he address do so the prime minister because there's an emotion versus tempered trump. chairman with us from blackrock this morning with a real

understanding of the linkages of economics and finances in the history of the moment. my words that was a gracious prime minister. that was very gracious. mario: if you judge someone by .ow they are in defeat, he is tom: this is a bullet? no. this is how whinburgh writes when he is under pressure. sterling drops some. g.d.p. down 2.7%. but the trade deficit explodes, that's his word from, 7% to an unsustainable 10%. i think that's a nice se kuenn shall thing from mr. whinburgh ut are we prepared for the ifference that will bring?

mario: when you lose, -- you ose before you gain. well, that is half a percent of g.d.p. this number is a big number and it will express itself over time through the currency value. tom: bring up the quotes for francine again. i want to make this clear. francine: you're absolutely right. so talk about emotion, let's look at currencies that are considered a safe haven. if you want to defend yen, you wake up this morning and i'm t sure what the next thing is, it -- >> no. they are not going to change their 30eu8 mix because of what's happened here in the u.k. it's a mix of at least one

monetary policy that's misjudged, which is the japanese one. francine: how do you find the -- ewen: they stop when you get to valuation points. tom: bring it up here. because this is something everyone is going to want. the ajasons as i of tomas jordan is dealing with the historic january comeback? they are the safe haven of safe havens. with this shock, does south korea become a witserland? switzerland? francine: what does it mean for the dollar overall? is it going to rally? ewen: i don't think it rallies hugely because the fed is off the table. and because the fed is off the table, it probably means you

should have interest looking at emerging markets in this situation. and without ooh dollar strong or the fed-raising rates, this could be the end of the equation. and what we are doing is being paid for taking less risk. in the emerging markets, sovereign debt, sovereign debt and in european banks it's finding the sovereign debt. tom: thank you so much for your perspective this morning. ewen watt is with blackrock. now, boy was this ugly. futures negative 76. on the board, quickly, if you will, the sterling. ♪

a ♪ it is the vote and shock of a generation, the european debt the united kingdom -- the united

kingdom will leave the european union fed this morning, the prime minister resigned to the governor of the bank looking to -- the economy could -- the economy. and an uncertain future, doing it with a vengeance this morning could -- this morning. it is a bear market. andpolitics, business, global wall street are humbled. next, elections in italy and spain. good morning come of this is "bloomberg surveillance" and we are live from headquarters in london, francine lacqua is with me. what was it like last night? people sayingt of that they cannot believe this happened. certainly the market did not believe it could happen. they thought it would remain, then that shock announcement

that the u.k. was leaving. tom: in the years i have done this, i have never seen more people this morning talking in shock than i have ever seen. even in 2008. francine: it was telegraphed, we should have been prepared more for it psychologically good -- psychologically. tom: we have a lot of research notes, a lot of charts to give you. let's begin with an update. here is a month contract -- emma chandra. emma: voters in britain sending shockwaves around the world, leaving the european union after more than four decades. believe campaign had 52% of the vote, setting them up for bitter divorce talks with the eu. and a new leader, because david cameron who led the remain campaign says he is resigning and a new prime minister should

be there by october. >> the british people have made it clear decision to take a different path and as such, i think that the country requires fresh leadership to take it in this direction. i will do everything i can as prime minister to steady the ship over the coming weeks and months, but i do not think it will be right for me to be the arstain that stairs -- ste the country to the next destination. emma: he has been in office for six years. and the bank of england is ready to come to the rescue, mark conte says that the bank will put $345 million into the system and there are additional measures they can take is needed. and donald trump is in the u.k. today, he will be speaking shortly in scotland about the brexit vote. the republican candidate is there for the reopening of his

luxury golf resort. he spent $300 million renovating the property is he also visited a resort that he owns in aberdeen. he will speak at any moment. news, 24 hours a day, powered by over 2600 journalists and analysts in 120 countries. tom: what you learn in these interesting moments, little announcements begin to add up. breaking news, this is again the macro -- micro adjustments for the business makes. -- mix. francine: we understand that they are weighing the delay of the ipo -- if you are about to do a massive merger, you -- maybe this is why we see weakness. tom: and the animal spirits swaying like that. let's go to the data check. this is not the true panic of

one or two hours ago, there is stability. futures, -78 this michael mcdowell futures -- and dow futures in the negative. oil had the dollar dynamics, hammered. do thewould, the vix average, not 30 or 40, this is not 2008. this is not august 2007. and sterling with a modest bid, down 7.6%. gold, yes. francine: there you go. britain leaping into the dark, this is the future for the banks. you can see that lloyds is down 42%. barclays down-- 18%. tom: look with the major did, --

steve major did, like iraq this morning. -- like a rock this morning. of about a terminal shot sterling, going back to 1971, showing stronger u.s. dollar over long-term. and we didn't down. that circle to the lower right suggests where a lot of houses are getting, not this weakness, as the system works it in, higher inflation, maybe slower gdp, there we are with a snapshot of sterling. what do you have? francine: i had the pound minding the gap. the biggest on record. overall, it set a record low. but also, i want to bring it back to 2008. you can see the intraday volatility, that would classify as a brutal move. with the pound. tom: this is what we like to do

best the two very smart people from different worlds. worldn majors shocked the with a call that occurred about three hours ago. 's is from the major house dead on. and gary shilling in the united states. we will pick up the pieces of international relations this morning, wonderful to have both of you. we can talk to both of you this morning. what does boris johnson do this morning? guest: i think he picks his words extremely carefully. the arrival of donald trump did not be worse time you could -- worst timing. i do not know if you saw those grabbingf donald trump boris johnson in a tight kiss.

this will be interesting. he was booed this morning when he stepped out of his house in london. some people would think that he would -- his position would be more credible going ahead if he could have been the person that called it patriotically. britainemains, with leaving, is he the right pair of hands to lead them through the turbulent -- turbulence? francine: we are looking at live pictures where on glenn merkel -- angela merkel is supposed to give a speech, and also donald trump. he wants to play into his campaign. we will see what he has to say in a couple of minutes. so we are looking at the analysis, some of the media saying that the u.k., the fifth largest economy in the world, handing the crown to france because of the drop of the pound. can we see the u.k. push the rest of the world into recession?

>> it has already bounced halfway back. and actually, when you use the superlatives about shock, it is actually appropriate, because the charges it is unprecedented. you need to go back 100 years to find that kind of move. it is not a disaster for the u.k., there are people who are talking about opportunity, let's wait and see how things unravel. it is a shock, because people did not expect it. why weren't they? francine: right. why did the market the ground? >> they were convinced by expectations by the media and very self-serving view of the world. and actually, everybody knew about the rise of populism, which you know, globally, they were not prepared to back it. and that is what has happened. it is not just about the u.k. or the eu, it is bigger.

all of this comes together. tom: you have the mother of all victory laps. what does it mean for gdp, when you talk to the economics teams, if you are going to brief mr. nimble this morning, what does this mean for global gdp and what does it mean for u.k. gdp? guest: we spoke about this before. when we made the forecast, the consensus forecast was 3.5% treasuries. people were talking about said funds -- fed funds above that. but in reality is that the cyclical -- the reverting type of forecast that you get out there is gradually moving to our view on the world. we had a much more structural view and when you see the stuff from williams about the all-natural -- we saw that in the u.k. maybe two or three

years ago, so i think what is happening is those views are cyclicalodox, and more , and they are converging are structural view. and it took into account demographics, more technical factors about the balance sheet. and actually they cannot converge on the save you from different angles. guest: you could say, if you are data dependent, looking at the numbers, gdp number, converging. rather than the tenured rate -- 10 year rate going to the gdp, the db -- gdp rate goes to the 10 year rate. francine: we'll take a look at boris johnson. >> i want to talk about david cameron who spoke earlier, and i speak for michael in saying house that i am in that he has decided to step down, but obviously i respect the

decision. i have no david cameron for a long time and i believe he is one of the most extraordinary politicians of our age. a brave and principles man who has given superb leadership of his party and his country are many years. reforming our public services, delivering one nation conservative government, making this country the most dynamic economy in europe, and with his own brand of compassionate conservatism that really earns his party the majority government. it was his bravery that gave this country the first referendum on the european union for 43 years. the first time that many of us had a chance to vote exquisitely -- explicitly on this question. today, i think all of us politicians should thank the british people in a way they

have been doing our job for us. they hire us to deal with the hard questions and this year we gave them one of the biggest and toughest questions of all. some people are now saying that was wrong, the people should never have been asked in this way. i disagree. i believe it was entirely right and inevitable, and indeed, there is no way of dealing with a decision on this scale except by putting it to the people. because in the end, this question is about the people, the right of the people this country to settle their own destiny. it is about the very principles of our democracy. the rights of all of us to elect and remove the people who make the key decisions in their

lives. and i think that the electorate have surged in their hearts -- searched in their hearts and answered as easily as they can, to a scale we have never seen before, in this country. they have decided it is time to vote to take back control. from the european union that has become too remote, to opaque, is not -- for the people it meant to serve. in voting to leave the eu, it is vital to stress that there is no need for hate, and as the prime minister has said, nothing can change over the short term except that work will need to begin on how to extricate this country from the supranational system. and as the prime minister has rightly said, there is no need

to invoke article 50. and to those who may be anxious, at home or abroad, this does not mean that the united kingdom will be in anyway less united, nor indeed does it mean it will be any less european. i want to speak to the millions of people, directly to the millions of people, who did not vote for this outcome. especially young people, who may feel that this decision in some up anvolves putting drawbridge or any kind of isolationism on because i think the very opposite is true. we cannot turn our backs on europe, we are part of europe, our children and our grandchildren will continue to have a wonderful future and europeans traveling to the continent understanding the languages and cultures that make

up our common european civilization. continuing to interact with the people of other countries in a way that is open and friendly and outward looking. and i want to reassure everybody that in my view, as a result, britain will continue to be a great european power, leading discussions on foreign policy and defense and intelligence sharing and all of the work that currently goes on to make our world safer. but there is simply no need in the 21st century to be part of a federal system of government that is based in brussels, that is imitated nowhere else on earth. it was a noble idea for its time, it is no longer right for this country. and it is the essence of our case that young people in this country can look forward to a

more secure and more prosperous future, if we take back the democratic control that is the foundation of our economic prosperity. i believe we now have a glorious opportunity, we can pass on -- pass laws and said taxes according to the needs of the u.k. economy. we can control our own borders in a way that is not discriminatory, but fair and balanced. and take the wind out of the sails of the extremists and those that would play politics with immigration. voiceall, we can find our in the world again. a voice that is commensurate with the fifth biggest economy on earth. humane, andberal, extraordinarily -- an extraordinary force for good in

the world. and the most precious thing this country has given the continent, the idea of parliament terry democracy -- parliamentary democracy. this thursday, yesterday, i believe the british people have spoken up for democracy. in britain, and across europe. and i think we can be very proud of the result. thank you finally to everybody who voted leave, the extraordinary and positive campaign that you brought. thank you. [applause] johnson in celebration, but with humility. i thought that he was most gracious toward the prime minister. francine: people are talking about a possible general election and we understand that the various campaigns or parties are trying to line up their ducks. it is an irony that we just

heard boris johnson and we are about it here -- about to hear from donald trump in a couple of minutes. he was really in the controversy. we talk about this on wednesday. the pro-remain side, he compared them to nazis. i do not know how the tory party can come back on that. tom: robin, the one phrase i heard there was glorious opportunity. i believe there was a glorious revolution. is this a glorious revolution? guest: it is a seismic moment as people have said about british politics, because the question is, which party does boris johnson lead or act to lead with others of, in the sense that the conservative party is now split for much of their space, it is perhaps taking into its fold the

independent party voters. the labor party is split from their base, where many of the people who voted out, they were labor supporters. so the party itself -- all revolutions, they start glorious, but they can end up bloody. we have not yet seen the real answer any inside the british policy. tom: the financial blood? the 1930's, using combinations. >> there is a defining utilization going on -- defin ancialization. maybe in some cases it will accelerate. these are not well-positioned. francine: what are the chances of a general election and what does that do to u.k. financials and what it force them to cut rates no matter what? >> for me? francine: for you.

>> i do not think we will see a general election. i wonder what the consensus will be for the conservative party to do that. if you think about it, why would they want to do that? guest: they do not need to right now. you would expose those divisions within the parties. francine: right. but maybe it is labor's big chance. guest: it will be the government. francine: we are trying to understand the ramifications. this is a question to stephen, when you look at the repercussions of this, probably the main with the toughest job is thomas jordan today. guest: yes. we need to look at those central banks around the u.k. and the eurozone, they are affected because of the currency shift and the chart you have joined the risk. the big spike on the left-hand side is the cap and they do not want to go back in that direction, so the question is,

will they intervene? tom: the terminal has shown this for many times. this talks to me about adjacencies, there is adjacencies on the issues. they are adjacencies for butterfly flapping in scotland today, it is flapping in korea today, isn't it? >> throughout the world, the sense that the west has lost itself -- its self-confidence, you haven't united states that is -- you have a united states that is seeking leadership -- tom: we have to start right now. is janet yellen at the point where she does not raise rates? many talking about it this morning. but even when we begin to frame a negative rate discussion and the united states or the

applicable, the rate cut by the federal reserve system. >> and to think a couple of months ago it was four times a year. tom: i will get you in trouble. can you make a prediction? >> there will not be any hike. it was out of the question for june, totally out of the question for july. they will not in september. the question now -- francine: they will never hike? >> they are done. actually, that is not just my opinion. look at where the market is today. it seems that the fed midst the opportunity -- missed the opportunity, they missed the chance. they may put the blame on the u.k. at the moment, before that i was greece. they will not hike. get over it. francine: well there be another brexit? we are seeing some much on the u.k. today. tom: i think you are right. spain. >> i think the correct thought

process is to look for the next fault line. where is it? it may not be in europe. obviously, there will be elections in referendums coming out and it really does go all over the eurozone. and the ecb is running out of tours. the government does not seem to consensus hase broken down. tom: we will go to robin. changed germany, everybody reeling from the last 24 hours, so what will you look and think about over the weekend, as the reset for the european experiment? guest: this is the dilemma that europe faces, the place around it needs to organize is the european governments, but the place it will most exposed the

loss of credibility will be to unify around the eurozone governments, so it is a delicate balancing act by the french and the germans, to show that together their focus will be on security, defense, terrorism, and where they can send signals about the future of europe around peoples insecurities, rather than create a big new plan. germany is very vulnerable. tom: we have headlines. francine: remember when it was that there would not be preferential treatment. tom: they said that three days ago. francine: he says, first of all, there will be no read negotiation -- -- the no ringing theegotiation, expect decision asap. this is an unprecedented situation, we are united in response. wants to jump in. guest: i am listening to boris johnson their carefully and he

said, we need to extricate ourselves from the supranational structures. johnson has a halfway house he is looking for. somehow, this is where -- tom: and to keep scotland within the united kingdom. guest: that was his first point. we will not be less united. francine: or less european. >> i heard that. he did not specify european supranational and the other thing this morning, they were very quick to say that the u.k. may or may not be downgraded. my sense was, i do not care. it does not matter. tom: we have a special guest. francine: the chief macro strategist at blackrock, rupert, good to have you. you know treasury. to george osborne, will he run for leadership or is

that all for him? >> i think i should let him set out his plans. the situation is the government will continue in place until october, so it is not a question that arises straightaway, we will have a conservative election to see who will be the next prime minister and at the beginning of october, when the prime minister takes office, it will be up to them to choose a new cabinet. i would not write radical changes -- i would not expect radical changes until then. francine: what needs to happen in the next two hours or two days for the markets not to continue taking? -- tanking. >> they have come back a little bit already and one thing they are corresponding to, you heard from david cameron and boris johnson, they say that nothing will happen very quickly. it will take time. david cameron rina -- announcing his resignation. it is not happening straight away. he has not triggered article 50,

the legal process you need to go to -- through to leave the european union. and one of the candidates will have to do that job. that in itself is reassuring. tom: we have a lot going on. at this moment, the first minister of scotland is speaking. she spoke with us yesterday. it was a piercing interview on scotland and their unique relationship with europe. the first minister speaking right now. we will listen in. >> it was our own referendum on independence that would end a relationship with the european union -- and to protect it. indeed for many people, the supporters for remaining in the you -- in the eu was a driver to stay within the u.k. it was no doubt that yesterday's result represented a significant change of the circumstances in which scotland voted against

independence in 2014. my job now is to act responsibly and in the interest of all of scotland. and that is what i intend to do. the cabinet will meet tomorrow morning to discuss our next steps in more detail, but i want you to know some immediate priorities. first my we have an urgent job to do. i spoke a short while ago to the government of the bank of england to discuss plans to reissue the market and -- financial stability. this afternoon, we will be engaged with discussions with stakeholders, particularly in the business immunity, to emphasize that we are still firmly in the eu and trade and business should continue as normal. we are determined that scholarly -- that scotland will continue to be a stable place to do business. the committee will meet later

this afternoon to oversee these immediate actions. secondly, i want to make it absolutely clear that i intend to take all possible steps and --lore all options to give on how those in scotland voted, to secure a place in the eu and in the single market, in particular. and i have made clear to the prime minister this morning the scottish government must be directly involved in all decisions about the next steps u.k. government intends to take. we will also be seeking direct discussions with the eu institutions and member states, including the earliest possible meeting with the president of the european commission. i will also be communicating over this weekend with each eu member state to make clear that scotland has voted to stay in the eu and i intend to discuss all options for doing so.

-- i should say however also should say i have also spoken with -- and he is play with this objective in london, so that there is, cause between us. -- common cause between us. this will be led by the government can't i will seek the involvement -- government, but i will it take the involvement of the government at every step and i will make a statement to the chamber on tuesday. i will also make a further statement following tomorrow's meeting of the scottish cabinet. the issuet me address of a second independence referendum. was -- said this -- tom: we have been listening to the first minister of scotland, with her many messages in edinburgh. we have guests with us, rupert harrison, rupert what i would like to talk about is a

blistering essay that was written on elites. we are surrounded by elites in andon, chatted house, yourself, how will be elites need to change and change the united kingdom? guest: that is a good question. it will take time to figure that out. but i think we should not generalize too much, particularly in europe and these issues are different in every country. it will take days, weeks, months to do this, but there was to fundamental issues which were very specific and not just a kick against the elite. one was on immigration, which has an element of that to it, because in the u.k. and other countries, they have under him and made -- they have underestimated how people feel about immigration.

and one is u.k. specific, how we feel about ourselves as a country and the sovereignty and our ability to govern ourselves. we cannot extrapolate much, but the issue of immigration is something that applies in many countries around the world and if we do not share that we can deal with it will be something that will continue to dog us. tom: rupert, thank you. the first minister of scotland with important headlines, they -- there have been a lot of people looking to explore options on scotland's eu membership. francine: the vote was, england was split and scotland was firmly in the eu. the price of oil is going down. but a very quick comment on this, how significant is it that she is now saying a referendum is on the table. if they do not want to leave the eu, who will they do a

be asap?m -- will it guest: you cannot afford to lose two. they will see what kind of deal the u.k. gets with the eu before they were about terms in which they would leave and they want to see how this stabilizes the price of oil. economic arguments can really hold. tom: and i want to point out that the market are not stabilized right now. we have a bit of a roll. 136 and 88 for sterling. to provide us with important perspective, a former member of the bank of england, truly one of america's experts on political economy in germany, adam pozen joins us. adam, on the calendar this morning, the chancellor of germany, so what will you want to listen for from angela merk el.

guest: obviously, she is about the most important person outside of the u.k. at the moment in terms of what she will say. the biggest thing will be how much distance she chooses to put between her and the statements about playing hardball with the u.k. i think the answer is she actually will not, she will be less rude about it, but there will be very little distance. and the second thing to look for, what she says about timing. does she tried to say, this will be a process and it will take a say,, or does she said, -- that they are about to invoke article 50, select revolve -- so let's resolve this as quickly as possible. but timing is the second thing. and the third, any commentary on how this affects stimulus from either the ecb or from the fiscal side in europe.

i did not expect her to say much, but it will be pretty clear. francine: does this have the potential to put world growth in a recession? if you look at global markets, the pound is down to the isopean losses on record, this uglier than we thought it would be? guest: it is not uglier than i thought it would be. this goes to what rupert is saying, you can attack experts, but at some point reality matters. i expected a 20% fall in the pound. crater in u.k.a investment. and now they have to rethink production. and i did expect currencies to move positive against the pound, europe negative against yen. said -- thisthey

is what you're going to get. pozen.t's stay with dr. bring of the images of the first minister of scotland. we are waiting for donald trump in scotland, as well. adam posen, a victory lap today for stephen major who called for 1.50% 10 year and another victory lap for your colleague. he has been adamant about how we work through this, we have immediate crisis as we are living this morning, and then we move on. recant for us professor blaine blanchard's moment about working out this in history. guest: the point is you need to deal with the hand you have got. thate coke -- cope is europe brings practical steps

for how to you -- move the europe area forward, that means better delivery, even though it will be harder politically. and emphasizing the reality that olivier and i spoke about, called reality check publication. onte andwhat mark c others are saying, that the financial world will take a hit, but is far more resilient than it was precrisis. and you hope that the u.k. becomes a learning point, that if you play games with right-wing populist and ignore economic reality, there is a cost. tom: adam, thank you so much. dr. pozen at the peterson institute in washington. francine: i want to pick up on something that adam said and pose a question. there are two scenarios. one, the european union

disintegrates and we will have more referendums. or that this shocks the eu into a better run eu. guest: i do not think it is quite as binary, i think that the eu has a choice. i think there will be a learning affect from the way that populism played out in the u.k. that will allow the other countries in the eu to try to adjust. but the reality is, the most important reforms, they are ones that the british government intended to leave behind, in particular the service market. they have been a big pleasure in this -- pusher in this space, particularly because these service markets are not with -- markets open. tom: robin, you are going to make me smarter right now because i'm clueless on article

50. it sounds like something from a science fiction movie. what is article 50 and why we care about it? guest: it is the legal structure under which a country that uses to leave the eu, must leave the eu. i do not know all the details. but it has never been used before. it will be the first time it has been tried. it provides a two-year window in which they organize with the leaving country. the other 27% the deal -- 27 present the deal to the leaving country. it is like rejoining the eu but in reverse. francine: one of the other 27, perhaps the most important, angela merkel who is speaking right now, expressing deep regret about the vote, and she said that she will address the lower house on tuesday, but she says this is a turning point for european integration and

unification. tom: and there was a conversation we heard from the first minister. for those in america, looking at the equity market in the united states, the german stock exchange is when you make up things at the bottom of the month. stephen majors, look at the chart. it is rolling over. the markets are not catching a bid this morning. guest: that tells you something about people's view of german exports, given that the u.k. is a very important market for german exports. it tells you a lot about risk assets. it tells you that the world has been over exuberant and overly optimistic about recovery, so it is a wake-up call. it is time to smell the coffee. tom: that different in 10 year and to yield did not fly -- flatten overnight.

what about that relationship that pros like you worry about, essentially unchanged. guest: i think it has gone to the lowest level it could right now. actually, the two-year rate has gone 50 basis points and that says that the french will not do anything. and to flatten from here, it will be very difficult, because the fed knows that in the forward and on an adjusted basis, the curve is close to inversion. francine: we're going to go to angela merkael. >> contributes to globalization, shapes globalization, and wants to shape globalization with the others. it is a unique solidarity, for freedomrosperity, and and only that way we will be able to stand up for our values,

for freedom, for independent, and our interests, social, economical, domestic and foreign policy. we will be able to stand up for them in the global competition. s need tor conclusion be drawn with awareness of history from the u.k. brexit, even if it is unimaginable to us, we should never forget that the idea of the european unification was one of peace. after centuries of terrible bloodshed, the founders of the toopean union found the way come together for peace, manifesting in the treaties of rome for nearly 60 years now, it remains for the future. anything else, but a given.

we all see that the world is evolved and it is at unrest. we feel the consequences of the lack of freedom, of conflict, in our immediate vicinity that has cost so many lives and had driven so many others from their homes. germany has a special interest and a special responsibility to make sure that the european unification is successful. that is why i spoke with the president of the european parliament and the french hollande, and asked the leader of italy for talks. on wednesday, next week, we will continue discussion with the other has of -- heads of state in brussels. for the exit of the member of the european union, there is a very clear and regulated

procedure in the treaty. this procedure previews several years of negotiations, at the end of what the details -- which the details of the exit -- merkele: angela talking about the exit. and also the people's bank of china saying that they have made plans for brexit, they say that china will continue to be prudent with monetary policy, and that they will keep the exchange rate stable. we will see what happens. maybe this will make their life easier, because we may not see a rate hike from janet yellen anytime soon. with us stephen major. mark my thank you for joining us -- mark, thank you for joining us. what will it take for the markets to find a floor? that the initial

reaction is understandable, given that the markets were really, i surprised. couple of things, you have seen the markets trade off of the lows so far. one of the things we are watching closely is credit spreads and other spreads in europe, within what we expect. so if those things hold, i think that we can look beyond some of the initial panic toward what is still working. but the other thing i would say, we need to keep in mind that this is a global event. we have had china, and on -- comment on it, and we need to see the asian reaction to the u.s. close on friday before we see one cycle of this turnaround.

francine: mark, donald trump is expected to take the podium in scotland, this this make you -- does this make you uneasy about the presidential election and what would that mean for the markets? >> there is a couple of very clear political crosses i think. expressed it a bit, but people may not realize the status quo of europe unchanged -- tom: we will have to go to theland with a protester at area. the cameras are picking up donald trump in scotland. and a protester of sorts. francine: it looks like a red nose. tom: there is security, i would assume secret service, with a

presidential candidate. here is mr. trump from scotland. >> a very historic day for a lot of reasons. one of the biggest modes in the history of -- votes in the history of europe. it was very excited coming in. we just saw the results. i wish everybody a law of look -- lot of luck. it is historic, what is happening is the story. my mother was born in scotland. she loved scotland. she would come every year with my sister and they just love it. -- loved it. -- loyalty to scotland was and she loved the ceremony and the pop and circumstance. she was something special. to think that we would be here one day, incredible.

she would come with friends and they would have dinner here, she did not play golf. andaving taken this hotel done the job we have done, it is an honor that i was given the opportunity. it took about -- we purchased it about 4.5 years ago. the local politicians, all of the politicians, have been incredible. and they have proved virtually knowthing we asked for, we the approval process, it needed to go through several different layers. the everything we wanted, they agreed. it is great. we have taken the lighthouse, which is a very important building in florida -- i mean, in scotland. we have taken that building and

made it something really special. inside the lighthouse right now is an incredible -- is incredible suites. it is called the halfway house. on the bottom, there is dining and the golfers will get something to eat, then they go next-door. was inlighthouse, this disrepair. and everybody from landmark, scotland come all of the people we went through, i just think you because it was a long process getting it approved. but they wanted to see it at the highest level and now it is higher than it ever was. when you see it, if you get a chance, you should try to see it. it is the most beautiful suites you will ever see. i have never really seen it like this. tom: donald trump speaking in scotland. and we saw a professor early on, but -- protester early on, but

this is his golf course, we have seen it for many days, this investment. and we will go back when he speaks about the referendum. francine: he put out a statement. he does not have a prompter. he said earlier that the brexit vote is a great thing, because the voters were angry. that plays into his camp. tom: and in france, as we go to the election in spain and italy this weekend, saturday and sunday worldwide on television and radio, as we go to spain -- i want to see stephen majors who has been good on fixed income. you mentioned the shorter-term yield, the two year yield. for those who have had two hours sleep, we will give you information. if you will bring up a terminal as a chart. 4000 times since a year ago, the

fed meetings in the united states, and a presumed trying to have a better economy. rising yields. for blue circles on the right. we have blown through the conservative deviation trend and we are now out on the chart to unraveling. -- so howy bakers can can bankers adapt to that? >> the bull market is telling you something. fedssis points says the will not do anything. maybe that plays into the hands of those in emerging markets. i think that we will be stuck here for a very long time. and with very low rates. now i need to go somewhere else. tom: we will speak about the knockout effect of the mexican peso. francine: or the yen.

tom: the mexican peso is an emerging market. >> i have no idea. maybe they will like because the currency is -- hike because the currency is weak. and i think that the bond market should look through that. as we go to japan, they haven't aeting in july -- they have meeting in july and the bank of japan will use -- will ahve t -- have to ease again. loosen thelicy -- policy. they have to. japan is probably the first of all of the big countries that will employ what we call helicopter money, because they will need to create fiscal space somehow and owning the majority of the debt stock gives the bank of japan and japanese government the opportunity to do it. but that could be sometime next

year. it is not an official forecast, but it is likely. tom: on international relations, robin, people ignored japan -- ignore japan from the international houses. take us to the chart again. summoning times we have seen this of the japanese economics unraveling. with your expertise, we focus on france, spain, italy, nobody has their eye on the politics of japan right now. i may say, say -- if they could probably spend less time on europe, and now we will actually have to spend more time on europe. and a lot of time on japan, my colleague would remind you. but what is adjusting of japan, are the parallels -- interesting of japan, are the parallels with europe, the aging society, and

the parallels with britain, now an island nation cut off with a suspicious relationship trying to look to the global relationships to push the economy. i do not like it, particularly. -- mineo not know what was yeltsin years ago, but it looks like we are setting ourselves up. francine: and what i still do not understand, i know that the central bank -- nobody is expecting it. what could the black swan the? -- be? hedge funds going down? is there nothing in the economy that could make it 2008 like? >> the central banks will only do what they can within their mandates. and as it goes to the historical comparisons, whether it be russia or what have you, we will

have to wait and see in the next few days where the real pain has been felled, because the the the markets went into this with a feeling, and we have seen that is events will bring casualties. so next week will be interesting. tom: go ahead. guest: i think there are two international economics things that are important. number one, in london just last year talking about britain being china's gateway to europe. that has been shut off. so what is the alternative? traded investment partnership, britain one of the big pushers muscle how does the u.s. manage that religion -- big pressures, so how does the manage -- the u.s. managed by relationship? tom: robin, thank you for your conservation. we are out of time.

stephen majors, thank you. francine, to me this is an honor. the last 18 hours have been extraordinaire. francine: i know that we will be live tomorrow and sunday. it just depends in the next couple of days what happens. we make the more shocks. is our coverage. 9:00 a.m. london, saturday. and 5:00 p.m. as well. then surveillance radio at noon. and again on sunday. and on monday, as well. good morning. ♪

♪ jonathan: brexit, the united kingdom votes to leave the european union and the prime minister announces plans to resign. david: and the pound saints to a 30 year -- sinks to a 30 year

low, gold stocks -- gold soars into bank stocks take a beating. ♪ jonathan: for our global viewers , welcome to "bloomberg go" and an historic day for the united kingdom. david: people said the money was smart, it was not. we have seen a global reaction. it has been a seismic event for the financial market. jonathan: let's let the numbers think for themselves. here are the market shares. futures in the united states, 3.75 right here and right now. getting hammered. stocksn blank -- bank down by over 14%. it is dramatic.