begin now. where is france when it comes to brussels. the u.k. opposition party turns on jeremy corbyn. as he fires the foreign secretary. tom: we look ahead for the morning open. convulsions or capitulation? >> a warm welcome to a special edition. bloombergin back at in new york city. we are setting up for monday. are we in for another volatile week? >> is no question about it. before we look at the market, let's look at where we stand right now. a seniorl after

lawmaker calls on jeremy corbyn to stand down as leader. to the pollss had for the second time in six months. and stocks extend losses from friday's global selloff. >> let's recap what we saw. the pound was pounded. under a great deal of pressure. maybe that is the story for monday morning. trading on the table. you it isat tells before friday, get them to rebate. outperform. uk'sd outperform the 10-year. the praise sharply to the outside. oneold outperforming the highlight. gold -- oil got hammered.

the spillover today is because middle eastern markets are trading. that is where we can go get some live market action. the df and general index down by percentage points. it just goes to show the spin up effect is truly global. david: we have not seen the end of it yet that is for sure. let us check into our bloomberg team for in-depth coverage. in edwards is in westminster. ryan chilcote is an brussels where john kerry is heading for and caroline is in paris with the latest from president francois hollande. the labour party, nevermind the conservative party, the labour party, the opposition seems to be in closing. walk us through it.

newspapers this morning are full of stories. morning, through the there is just as much chaos if not more at the labour party. is leader of that party under considerable pressure to resign. he had already been facing a no-confidence motion from a number of vps. now, the bench shadow cabinet a number have consigned this morning. including somebody with some profile here in the u.k. also, it a shadow chancellor. saying if there were to be another vote for the leadership of the labour party that jeremy or ben would win that. he defended jeremy corbyn's record on being able to bring the industrial heartlands with him. remainy that is why the campaign was not successful, because jeremy was not able to

go out there strongly enough to bring them back with them. maybe he did not believe the message himself. in events of jeremy they are saying look at his electoral record and the challenges he faced. he did manage to deliver. on the economic policies calling for a fiscal stimulus into the u.k. economy right now. they consider whether you will see a monetary stimulus coming from the bank of england of course. expectations are 40%. john? john: let me to get up. there looking at a story by labour party this morning. a lot of people are scratching their heads and saying, where is doris and where is osborne. >> he gets. where are they. i know boris was playing cricket yesterday. he is also being talked about in the daily telegraph as being days away from launching a leadership challenge which would

be no supplies he is one of the front runners for the leadership of the conservative party. leadingnstrumental in the leave campaign. we have not heard much from him since monday. suggestions as to where he might have gone. some people are concerned. saying, we are not cross just concern. in the manner of a worried aaron. if you search for george osborne this morning, the fifth suggestion is george osborne is missing which is suggesting people are wondering where george has gone. >> i have seen pictures of him onthe side of milk cartons twitter. david, it gives you a sense. if european wants u.k. to get a move on, the u.k. politically right now is fragmented on both sides of the debate in a huge way. >> exactly. the question is, what is going

on in the european side. let's go to brian chilcote in brussels. who is going to lead the european union in negotiating with the u.k.? ryan: i think that is going to be germany. we see germany making those moves. tomorrow the german chancellor is going to host the french president, the italian prime minister and another who represents the eu countries. the member states here in muscles at the european union. she is doing that just one day before they all gather have brussels so she can get them all on the same page. i am not sure the germans want to be the leader of the european union but i think they feel as the largest economy in the group and the one that wants to keep they have to. remember the germans are most interested in the eu as a political club.

the french want deeper financial integration, more cooperation, one eu finance minister to issue debt together. these ideas do not go down well in germany and the germany people are concerned it might not go down well in other countries. still beit, there will a countries within the european union that do not even use the euro. they feel it will be a big tent and the country best positioned to deliver. >> a john kerry is in europe right now headed to brussels as i understand. what can he do to make it better? look, the uss huge interests in europe. you do not need me to tell you that. he wants to signify to the european union and the u.k. that the u.s. is neutral. maybe not impartial but definitely neutral. do not forget the last big u.s.

politician in europe was donald trump. i do not think you are going to hear john kerry say that. the big thing for the united states is trying to get a sense of where this is going and how they can maneuver it. they're concerned about geopolitics, about a disunited in eu and what that means for russia. they are concerned about trade. the u.s. and the eu together represent 60% of global trade. they've been working on this for three years. they're getting close. there were already set. now what the second-most -- tradet economy, the u.s. deal might be dead. >> thank you very much. that was reporting from brussels. >> we have breaking news from two places right now. we will deal with the u.k. stuff second. we are getting commentary from

angela merkel's chief of staff. clearly connected into her thinking, saying that no rush, and no rush in brexit implementation. very much against what we were hearing from the foreign ministers. not in the same party as angela merkel's, indicating there was a rush. merkel, is not saying that. that is coming through clearly. the u.k. should have a chance to consider the consequences. it is saving hand, face because the u.k. will not be able to get its act together anytime soon, given how we do not know who will lead the negotiations. that plays into a story from over the weekend, the idea that maybe after the 15th, it just may be they want to take time not to just get the negotiations and exit right but maybe they want to spend time trying to convince u.k. leaders not to exit at all or some sort of be comingund may

through. >> you have the 17.6 million voted to the u.k. who leave the european union. you will want to know what happened to that. >> yes. there's also the possibility they changed the terms of the deal and you can to get back to the british people. you can understand how the conversation is taking place. valid, taking no for an answer. you see time and time again, they go back and get a second bite of the cherry. i wonder that is the thinking now. let's go to paris. that, there is believed the six founding members have some pre-given right that they have the ability to speak for the whole of the eu. it is now clear maybe the french a.m. germans are not on the same page. what are the french leaders

saying right now? what is there thinking? be a bitere seems to more of a rush from the french leader. the german side who does not anything.nt to rush on the british side, everyone we heard from including the french president, they want the exit to be as quick and smooth and swift as possible. very quick. of course, president francois hollande has the election coming up next years so he wants is to happen before the next presidential election aunt he wants to put in and to the ambitions of the contender rising very quickly. she had a big smile yesterday at the palace. >> fascinating to see how the french politics story is

developing. thank you. we will carry on the conversation. plenty more to come. former u.k. ambassador to the united states will join us. ♪

>> at a new decision to exit the european union. leaders are speaking out on brexit. everything i can as prime minister to steady the ship but i do not think it would be right for me to try to be the totain to steer the country

the next destination. >> the bank of england will not hesitate to take additional action as the u.k. adjusts and the country moves forward. there isal to stress no need for haste and as the prime minister just said, nothing will change over the short term except work will have to begin on how to extricate this country from the supranational system. negotiations to start as soon as possible and think globally about our future and june 23 needs to become an independent bank holiday and we will call it independence day. a decision that scotland will stay in and the model argument of they evening is even stronger.

>> where do we begin? to the u.k. ambassadors united states. ambassador, good to have you on the program. what kindquestion is, of work is happening behind the scenes right now? are they trying to put together a team of civil servants? are we not. ? in the, i am not government anymore as you know, so i am not wholly aware of all of the details going on behind the scenes. clearly there was contingency planning made an advance to take into account the referendum that would produce this result. the prime minister said he is not going anywhere yet. there seems to be a need to establish the new leadership of the conservative party before firm decisions are taken forward. at the same time, some member states, perhaps not so much in germany, once to get this going

and have the uncertainty gone and not give momentum to stimulate the referendum. as the dust settles, as we realize the extraordinary consequences of the decision the people took on wednesday, there seems to be a sense it is more important to get this right thing and to rush ahead without the proper structure in place. without the framework, team, place, and clarification and that sort of thing. it feels in my mind as though, yes, we have to do this even know there are deep ones, if you like, in british society. but let's not rush ahead rapidly. >> let's talk about who the u.k. talks to when it decides. you and you give us your sense of how coalesced you think the

remainder of the eu is around the original six? it seems quite strange that we have this belief among the original six that they have the authority to negotiate. peter: clearly, there is no legal status to the six. of course, the founding members have ownership of the whole venture but there are 28 member states. they all have the same legal status and right. votingl have the same rights when it comes to majority voting. each is a sovereign state with when that ispowers necessary. i think there is no formal status for the original six and the important thing is to work out with all of the institutions the key leaders of the member

states. where do we go from here? how do we end up with something as good as it can be for the continuation of the european union and u.k. we are not a negligible union state. we have a net deficit so they have an awful lot of business they continue to do with the u.k. and i do not think anyone wants to destroy that. remains a serious player in nato and international organizations which matter. york,david westin in new one thing we know for sure there has to be a lot of negotiation he tween the u.k. and european union. what if they decide to renegotiate and not have brexit? who will take the leading or? the foreign minister and

will that began even as recently as right now? >> i cannot give you a definitive answer david, but article 50 if that is the root and we go down, has to be triggered by the british government. it has to be taken by the british government as a decision. the prime minister said he wants to stay on the ship at the moment but he has triggered a veto. we will hear from others from the party here in london but that might not reduce a result before november or december. others say we need to get on with it right away. when not actually know that will be. we definitely need senior ministers and place. the decision on triggering or not triggering the article 50 probably has to wait for that.

>> that his former ambassador to the united states peter westbrook caught. coming up, can brexit be overturned. more to come next. -- peter westbrook caught.

>> and john, were to we begin? a series of questions. will try to summarize here into it now. >> it is not impossible. the thing to remember here he is this is a nonbinding referendum so in theory, the next prime minister could choose to ignore it. or ignore part of it and

continue as they were. cannotreal world, you ignore the views of all these people. so it is extremely unlikely. however, you never know. lead to a nasty recession. a massive meltdown. you could see voices out there probably from labor but democrats saying maybe we should rethink that. very unlikely, but politics is difficult. is the constitutional story? could nicola sturgeon say, we are not going to do this. >> certainly. leaving the u.k. could be one of the factors. it prompts the political establishment to roll back a little bit. there the question of whether the scottish element will veto it. it is not 100% clear but the

constitutional lawyers are going to be looking at this. >> not just to get it right. i cannot help but think there is a sense it emerging in europe that may be u.k. backs away from this. the question of whether we can actually revert the decision. she would not be asking care of it was the other way. as a full sense of security emerge and maybe europe changes his mind? >> i think what you might see is a more consolatory view from germany that the french have been very adamant. needs this.in you had muggles saying, we don't want the talks to be ugly we want them to be friendly. it might be more of that that you are seeing. the pragmatic german approach

rather than any false hopes that we might rethink this. injon ferro, ready to put the pitch? they don't have a leader, don't have a theme. coalescing at the moment. members, i find it very strange and if i were irish or from another part of europe i would be questioning that. >> six foreign ministers in berlin yesterday, was not a great response to the skype. if one of europe's problems is that ordinary people talked down to them, that was not the best way to begin healing those wounds. >> thank you very much. the conversation continues next.

♪ london, withity of investors still reflecting on the day. look at the market action from friday.

action instic price one direct him. we can get through the markets very quickly. sterling getting absolutely blasted the in one area, down by eight percentage points. 830-year low. 7.4 percentage points. the biggest one-day drop of spanish and at italian markets in history. all-time lows with a stunning move, down by 29 basis points on the session. u.k. low yields in the down by 3.6%. the s&p 500 negative at close. 1.56 percent. we saw the selloff extend into the middle east where trading is underway today, this sunday. by tsm federal index down

2.2 percent. david, truly a global selloff. david: an update on what is making headlines outside. for that will go to taylor. with first word news. taylor: boris johnson will launches bid to succeed david cameron as conservative a leader in the next few days. the telegraph says johnson is backing names of lawmakers who would back camp. he has been urged to challenge but does not want to. and widespread turmoil in the labor party. the association says as many as six members of the labor leader jeremy corbyn senior has quite in protest against his leadership and it was prompted by his decision to fire the spokesman. some have criticized or been for leading a week campaign and eu referendum. john kerry is going to u.k.

and emphasize u.s. support for the eu. tolondon, he is supposed relay a message from the white house that the special relationship between the u.s. and the u.k. will not change. global news, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> time for the morning must-read with tom keene. there's too much to read. tom: there is. go around the world a little bit. terrific coverages but quite a photograph of david cameron looking shocked and dismayed. this is the wall street journal from saturday with the u.k. vote. i really want to talk to about is this one. the new york times this morning, post-war unraveling.

they question whether there is something bigger going on than just the u.k. separating from the eu. if this is an unraveling of the whole structure of the world set up after world war ii. >> i think they said monday, there's a meeting. the bankingd of system in europe and the united states and overarching that is where you are going in your timecode. the european experiment. this wording, confederation. not the canadian confederation, are we so disjointed we would break up into odd blockages in spain, italy, france, etc.. entire wave of history since world war ii has been to increase international trade, increase unity. tried once in this country.

there are real problems, friction problems for the confederation. tofriction is a great word use. it is not the friction of age. thistinue to go back to caustic environment based on the size of the public in europe. even in america that has not gained in the last 10 years or 20 years. that is what this referendum is about. >> i think we saw with this referendum where you hide the north more economically england.d then they feel disenfranchised. they do not feel they are participating in the great dream that london seems to be and join. >> different than the leads of france, germany, london. .ynn has been very clear interesting tensions and germany we're just learning about. >> it is hard for us not to think of the possible splash

back in the united states into mr. donald trump and what it means for his candidacy. >> just after getting off the trump helicopter in scotland and the oddity of that moment. i wonder, where is that one week from now? >> that was extraordinary. to sell his golf course, basically. then he tweeted out, it is great to be in scotland they voted for independence. but they voted the other way. it came to a complete halt. people not as familiar as you and me with the culture of america said, wait a minute. we do not understand this. they look at trump like we look at corbyn-cameron. >> thank you. tom keene joining us from surveillance radio. turn in at 10:00 a.m. with tom keene and michael keenan every

day. >> i want to work through what is happening with the newspapers in london and across the front page of the united times, after brexit, what now? and under that, what have you done? a message to prime minister cameron. emerginga sense in that somehow in some way, someone is going to try to warp this back. i suspect we would not be having this conversation if it was 52-48. you get the sense as the day progresses, is someone going to try to walk this back. >> the message you have delivered consistently, if you -- ask again. you saw it with the french referendum. we can't compute. we must go back and ask the question again. i suspect the muscle memory is

firmly embedded. let's ask again. are you sure? >> the other question is, ask you? and who is doing the action. >> the news this morning is all about for us. that is the front page. the tories battling to stop boris. thereas clear was that are a whole lot of mps out of touch with the views of their own constituencies. now in aeel it right bigger way. >> this is a deeply divided country and we talk about the fact it was a referendum that went just way. deeply divided nation. my tech way is, you can talk about the politics of the left and right, but we need to flip it this way and talk about beliefs and elites versus non-

elites. a new spectrum of politics very represented in europe. the u.k. has unbelievably low unemployment compared with the rest of europe. sohave a disenfranchised she'll economic group. what do you think is going on in the rest of the european union? >> let's continue this conversation. from the peterson institute, great to have you in the program. a vote against the lead, typically referendums, you vote for the status quote. what was witnessed in this referendum was a huge mass of people voting not for the state, but he danced the elite. g7, whoever it may be. as at the lesson it you draw from this? one of the many lessons you draw from this?

[in on a bulk] >> we seem to be having a problem with the line. it continues, the reason that european leaders want this over and done quickly, one of the reasons, is next year french elections. next year, german elections. you talk about the a's they are holding. once you trigger that, it begins. you lose the power once you play it. >> in terry, yes. >> at the moment the ball is very much in the u.k. court. highlightedalready some of the issues. if we see an issue with the global economy and the ripple effect continues to be magnified and the lack of clarity surrounding this issue remains maybe the financial markets which don't like

uncertainty will react in a big way. that could play one or two ways. re-think ande a people say, this is so bad. it is a lehman-like moment. lyricalto make sure the story as a stabilized and maybe then we will look at another referendum. we are sitting on a sunday, waiting for the markets to open. i don't know where george bush is -- george osborne is. ont is getting traffic social media. let's give it another try. we are still having some technical problems. i want to route the segment up. tories at work, the front page of the sunday telegraph. the labour party is an imploding . if you are a german leader right now, two words. no chance and i would add a few more words, "it is just not oing to happen anytime soon."

they both have to sort out their internal problems. europe has to decide who is going to represented. angela merkel? the founding six? that is far from clear at this stage and the u.k. has to figure out what it wants to do as well. as questions are unresolved. markets are going, excuse me, i would like some clarity. friday may look he nine. the markets are looking for political leadership and the points we are trying to make is there is very little of that going around right now. will carry on the conversation coming up next. in ble is scheduled to meet july. will they cut rates to a new record low and will governor carney still be governor carney at that point. we will talk about that and

monetary policy next on bloomberg .

>> welcome back, you're watching bloomberg . let's talk about what is happening surrounding the economy on where we go next. us, he isella joins the lead u.k. economist. when you look at what is happening next and you get an idea of the reforms, what do you want to hit?

some acts had already. and, with extra liquidity. ready to useounds if banks needed. but of course, they want time to assess what happened. the move has been abrupt. we will probably get a bit more there. i want to wait and see what happens to the economy. they don't want to rush into this. week into higher inflation will actually be an immediate concern. that pushes inflation higher. inflation is running well below target. >> we are referring today as the bank of england. .oing to governor carney giving the way he dealt with the

referendum on the way in and now. .e was so close for many people looking at this, the perception was he was incredibly close to chancellor george osborne. >> right. he was hired by george osborne. george osborne has said comments like, we have the world's top central banker here. i don't think there is any behaving anyrt differently. he has to speak about the referendum. a clearly affects the mandate of the bank to not only meet the target but it affects the objective, which is to keep unemployment strong. this is a clear risk. that is the biggest immediate risk. we agree with that in think he has to speak out into we do not

think he overstepped the mark. didink it was just like he with his scottish independence referendum, he had to week up. >> as you say, mr. carney has to face his dual problem and he has some time. that there is another issue, the current account balance. running at a deficit. at what point, how long does he have until that starts to affect the u.k.? >> right. u.k. assets has taken a hit. give ustrying to external balance. so unless we have this very adjustmentn

in the currency will help. it will improve the account balance. that is the way it works. both through trade it will help with some of that lawsuit specific and the uncertainty account andith the other parts like the income accounts. the primary income and secretary accounts. particularly the accounts where my that is our next cap of income and abroad. , whenof that income transferred into british pounds is now with more because the value of the pound has depreciated. be mechanisms to try and approve the current account. it, the i understand

current account deficit is not as bad. insofar as this goes, as it is saying, let's keep people out immigration.on could that really makes the situation substantially worse in the long run? >> in the long run it could do it. in the u.k. realize a lot of insecurities. the u.k. has run a very large service. and an even bigger trade deficit. we need those surfaces. and rightly so. if we lose access to the single market, the european single market, then we lose sight single asset to the market and services and there is no other free trade agreement that compares to the european civil market and terms of allowing the free movement of services. so that could be key. but we have two years from

asicle 50th trigger, as long the u.k. doesn't do anything silly like trying to restrain movement. then there should be no change in the access to the market. what yourto know inputs are. beyond next year, i do not know what the agreement with that europe looks like and i do not know when article 50 gets triggered. i don't know when the formal conversations start or the even if they will be. what are your assumptions for the next year or are you modeling political uncertainty. >> right. political and economic. right now, the emphasis has to be on political uncertainty. we don't know when article 50

will be triggered. to beks like he is going a caretaker for a few months. it might take longer for this new conservative leader and prime minister. it usually takes 3-6 months. then, there could be some informal discussions in the background. is key thing to watch now over the next three or six months, to will be the next european leader. >> what government will be formed around that person and we need to go to new elections as well. we learned when gordon brown became prime minister from tony blair that people were questioning his democratic mandate. the evil. elected by we have the issue again which is partly why the labour party has agreed. corbynot only how jeremy

has been complete within the performingy, he was during that referendum campaign. a new general election and they want a candidate who can win. >> that was unit banks lead to e-commerce. up next, friday's job and the pound was the largest on record. will that continue? that is coming up on "off the charts."

jonathan hi, i'm jonathan ferro. i've got david westin. the biggest drop in record. check out the charts. 1990 two. a lot of people were referencing

the fx market. the small red if our left and it is nothing compared to the red dot on the far right. the biggest move on record happened friday on the cable. that is the take away for me. the biggest one-day move on record ever for cable. it -- the cable rate was there in february. it appreciated. that is why we saw the wisdom. >> throw money was clearly what was using the option markets for the insurance. itt is what you are using for. the options market, much more of a stable market there but if the -- fund community is there, it has the ability to spread the volatility around. but it got long, which is surprising. bring out the risk

reversal charge and another chart as well. skyhigh. it was skyhigh, a remarkable move. >> the bottom like you have never seen. it had to flip the other way. market is still reeling on the back of some big, big moves on friday. the question is, how to live up on monday? >> it is deeply humbling because we thought we'll knew but we did not know so we should remember this for the next time and the next thing is, how much of it is real and how much is the market over iraq inc.? coming up next on bloomberg though, we have a lot to talk about. ♪

>> european leaders want formal discussions to begin now. plans to deal with the brussels.

>> labour party, lawmakers turn on leader jeremy corbyn as he fires his shadow foreign secretary. >> and brexit stress test. we look ahead to monday morning and the market open with friday's market convulsions it just the beginning. music the -- welcome. warm jonathan ferro alongside guy johnson in london. lower global hedge in new york city. we are setting up or another volatile week in this market. >> a big week coming up. before we look at the markets, let us see where we stand now. british politics in turmoil after a senior lawmaker calls on jeremy corbyn to step down. they are pressing hi