who has been given the houses 1969. you are a skeptic. >> it was fascinating. inc. you for coming to us from westminster. there were a lot of good things. we will start i am david westin here in new york. welcome. it was very interesting what he had to say about how worried they are. interestinghat very too. if you sit here and think about how a general election will be triggered, they need a big majority. it seems to me that there are , they labor mps out there think, we are not in a position to do that. >> it does pose questions about , kind ofwill work

what legitimacy does force johnson have. then he will proceed on from there. it will be -- .he subject of debate >> let's go back to westminster with francine. i don't think people expected to see the development inside the

labour party. we have been talking that the conservative party and the problems they have been facing. at large, there is a particular view of the world right now. francine: i think that is probably the understatement of the year. when you look at the conservative party, we have a -- therendle on what is a lot of political elite and labor who think that jeremy corbyn will not be prime minister. even with leadership contest, he may get enough votes to stay in theer because of change a few months ago. .t seems like a big mess it seems like everyone is buying

labour to at get their views across. understand you take away. what would happen if the u.k. votes to leave the european union, the prime minister would go almost immediately to brussels. not just the outcome of the vote, but the process is not playing out in the way that they anticipated. this is a lot messier than people thought it would be and will take a lot longer as well. is that your takeaway? my take: i think it is away. overall leading up to the referendum, we are talking the newsroom about whether angela merkel and first one look off -- ois laqua had a plan

b. i really like the analogy -- i'm not a football fan -- by like the analogy of you don't have a team playing. if you go to brussels, you don't know who to send. they say, hold on, we are no .ush to article 50 he also said, we don't want general elections because the labour party is not ready for it. no one seems to be bothered with fromuncertainty apart maybe markets and business people. >> i'm fascinated with this idea that there may be a renegotiation of the deal. kind of like a labor negotiation. we keep coming back for new negotiations. if immigration is a real factor, is it possible for the eu to give up and satisfied the seven million plus brits who voted to leave the european union. francine: that is also one of

the things that people are talking about. legally, the eu could do everything they want and say, they could speed up a trade agreement, but what kind of signal would like it to other european countries? withber what happened greece. angela merkel was very clear, we cannot play into referendum or popular votes because it does not serve anyone well, if the to limit that, it could give impetus to others to do the same. it is a possibility, but it could be the start of the unraveling of the eu. >> francine and westminster, thank you. other half of the household is french. iny will be very interested

the score, another unexpected result coming out of europe -- >> this is the host. the luck of the irish is being sensational in this attornment. .verything is playing out speed,ill keep you up to of course. joining us from new york, the director of high-yield. great to have you with us on the program. i would imagine that for the next couple of weeks, there will not be much. what do you think? >> i think markets in the short term will be under stress. in the long run, this may be better for high-yield markets. low growth tends to be good for high-yield environments. this comes back to something -- markets, comparing the

especially those trading at decent pes need growth to do well. high yield markets don't. to the extent that brexit weighs on global growth, to the extent that we don't go into a recession, it could be good 50 long-term markets. >> is mario draghi going to be a big buyer in this space? >> even if they don't do anything, it is having a knockoff effect. , peoplee need income will obviously have to go towards high-yield. whether or not they buy directly, it will have an impact. >> how far does the portfolio affect go? >> in terms of what? five in mario draghi

and it ripples down through the rest of the market, give me a sense of how that ripple affect works. how far down does it reach? >> it could reach to the equity market. shortly not in the short term. people need to get returned, they need healed, and income. people are going to go out and then you risk the tantrum -- you risk seeing that in europe as well. the day of reckoning will come eventually. >> what does this mean for the raging debate between active versus passive management. where are we now? >> high-yield is one of the areas where the average active manager, particularly the etf's beatout 70% of funds do the indices over time.

you can react to things like this whether it is avoiding energy or being a little smarter .round how you play brexit the equity side, the market side,ines -- on the bond the more leverage they put down, the more probability it is and the lower the yield you get. >> if there is an issuance of high-yield for some time, as many are talking about, what does that do to the marketplace? >> on some level, lack of issuance is good. don't tend to last all that long. even in 2008, the market with closed in the fourth quarter and opened up very quickly again.

in the next week or two, people will be a little on edge. yields are still not that high and people who need to issue will probably be able to over the next few months. >> on the ecb side of things, the ecb is trying to help financials, banks. wonder, a look at the moves on friday, and it was actually quite scary. even here in london, it is stuff .hat they can't buy you think the ecb needs to do even more, put more on the balance sheet? to think we could see the ecb buying bank debt? >> i think the market wants them to do more. it gets back to the question, what is the purpose of central bank action? in the long run, their mandate is not to stabilize asset

prices, even as much as they think it is. that may be a good thing in the short term, in the long run, i'm not so sure. >> thank you so much. that is the director of high-yield. let's get an update on what is happening outside of the business world. taylor riggs is here with first word news. taylor: voters in spain are selecting a government. the acting prime minister is likely to win the most seats. polls show that no single party will win a majority. the next government will have to cope with 20% unemployment and the second biggest budget deficit. a new poll shows that support for donald trump has plunged. the poll has trumped trailing hillary clinton 51-39. last month, the same organization had him leading 46-44.

roughly two people of every four surveyed say that he is not prepared to be president. is clearing the way to sell natural gas to turkey. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am taylor riggs. this is bloomberg. david? is a much she has been called a contrary and, above the title. coming up next, we're joined on bloomberg . ♪

david: this is a special edition of bloomberg . i david westin. joining us on the phone is gonzali. you were on on wednesday talking risk and volatility. facing bothe we are at the same time. >> sure. volatility is really a short-term price action and risk is the risk of permanency losing capital. i think you want to distant wish between the two because one can take advantage of volatility when risk will take advantage of yield. it is a very important distinction and one that we make all the time. where do you see the opportunities that you can take without running into too much risk? any think, like with

unexpected news, there is a need on action. the immediate reaction is to sell first and ask questions later. that creates opportunities because as it was pointed out, some 80's could be thrown out to the bathwater. i totally concur with the decision to sell off the financials, in particular, the banks and insurance companies, not just in the u.k., but .rankly, worldwide there isnagers -- -- rtunity to sift through

what is the hit? >> i think there is potentially another double-digit hits that open equities can see. i think that is pretty small in the scheme of things. corrections was already happening. into the vote and the election ,

-- david: i just wonder what the p&l looks like. we are talking about a slowdown in european growth. that will hit the top line of many companies. they are already struggling and as a result, what does it look right now?ope maybe there are more downsides. i'm just wondering what the is this model looks like. right.ink you are it has been constrained, but i think equities tend to have multiple levels which is ultimately what drives valuation. what cost-cutting remains a significant level, i think that is less so in the u.s.. it is certainly the case in europe and we see a lot in japan which is what supplies investors in that market.

japan has not seen revenue growth in a while. i also think that people are forgetting that the u.k. has a competitive tax rate and this will incentivize them to keep it low. many companies do care about corporate tax rates more than they do about interest rates. companies that tend to be agile make decisions to serve constituents rather than governments which take consensus to have decisions come through. in my view, equity owners will be able to pull multiple levels opposed to anyone. as you look at an industrial sector, the energy sector got investors are and able to reduce the working capital and still report free cash flow growth. i expect accommodation of these

will happen as well. david: do we also see an increasing divergence in investment among european companies? we tend to think about as europe as a whole. is germany different from france different from italy when it comes to investment? >> it always has been. i think the mistake has been to use the cost of capital when it comes to currency. we have never done that. to us, it does not make any difference, but you are right. people will pay attention to this. that said, worldwide, the unifying theme that we have seen is companies the drive their own destiny -- even in a country like japan, there was 20 years of pain, but you still see successful companies selling abroad in making sure thathey are able to drive, whether it is

coming is like toyota -- i suspect again the same will happen with french companies and german companies and dutch companies. stop thinking about them in terms of where they are headquartered and think in terms of how they are able to translate business into returns. david: thank you for being with us. she is chief investment officer of global equities investments. >> coming up, markets dropped around the world on friday. how severe was the nominal loss? we will show you next on the program. you can take advantage of volatility, risk will take advantage of you. ♪

special sundayis a .n of bloomberg

how much was really lost. in case you wanted to know, let's take a look at the numbers which are not too terribly encouraging. there is a chart that we want to put up about global equiti. the number is about $2 trillion to you see the red line. the question i have, going into monday, was this an overstatement going into the markets or a start up trend? >> that is the trillion dollar question. the question i would be asking is the magnitude of the moves, the biggest one-day loss is in spain, and in italy. that was my take away from the price action on friday, what was happening on mainland europe in the spill over economically and politically -- >> in particular, we were highlighting how the financials

will get hit. what is the health of the spanish-speaking center, this will be a big story that europe will be paying attention to does that carry on? if so, that is a problem for mario draghi. david: if you look at the market they reallyyork, took a beating. took a plunge. 50 sell the lease. >> let me pick up on that. you need to base this stuff in a single currency. if you compare it, and look at it, it looks like it did not fall as much. and it iso adjust it

what took a really hard hit on friday. >> it is really interesting. 70%-80% of revenue earning sexy comes from abroad. this will not be so bad. majority of the revenues is part of currency. that was part of the story. the other thing i would show is versus the 250, those who don't have that foreign revenue, they got hit, and hit pretty hard. tomorrow, join bloomberg for an hour-long conversation with alan greenspan. the conversation continues. ♪

david: welcome back to a special edition of bloomberg . breaking news i want to get to very quickly.

comments continue to pour in. german viceom the chancellor. .here are no half memberships check this out. cameron should resign even sooner. >> this is really interesting. it is germany in conflict with itself. this is the sep speaking. we heard from the foreign secretary. he comes from a different party than angela merkel, a and as a result of which, there is conflict over how this will work. this should have been fairly quickly. angela merkel, from the cdu, which is the senior party saying, back off a bit, time to

wait, maybe we should convince the u.k. that needs to go in a different direction. we will give them time to consider the options are germany is by no means unified. >> you talking about a fragmented u.k. on either side. for me, we are not just talking about a conversation of how this .esolves itself for a lot of people in the united kingdom, this is why they voted to leave. this kind of language, telling another country to get a prime minister, this is the kind of language that, for a lot of people, they voted to leave. >> agreed. it causes a great deal of concern as well. germany ishat dictating in terms of europe. the biggest case that shows that the moment -- on the other hand, you could argue that germany has the best potential to be

supportive for the u.k. as they work through the process. >> and quite clearly has an interest that is tied to the opinion. at the same time, they will not win you pull over with that kind of thing which. we will continue this conversation throughout the platforms on radio and tv. a fantastic lineup of guests. this is the special lineup. fed chair, alan greenspan, former secretary of state, madeleine albright, and citigroup head of mma, peter tage. what does happen to global mma with this amount of uncertainty in europe? >> i think everybody sits on their money right now. they think it will go away relatively soon. they said, right now, there's so much uncertainty and people will driey.ing them welcome back, john, thank you for joining us on sunday.

as we get ready for markets to open tomorrow morning, the question is, how would they react in the united states as well as your? what is the real effect on the u.s. economy potentially pulling out of the eu? rectified the first comes through trade. u.s. exports to the u.k. are only 0.3% of our national output . exports to the whole of the eu u.k., isluding the only about 1.5%. the direct leverage of economic weakness in europe, if it arises from this, on to the u.s. through trade is relatively small. we're talking about tweaking 1/10 of a point, or two. there are two other things to think about. one is the potential to strengthen the dollar. the pound is already at the weakest level since february of

1985. i'm not sure how much weaker it needs to get on a fundamental basis. i think the problems may be more about how it's those over into the euro. the third is if there is any systemic issue like the war of 2008-2009, spilling over into the markets. i don't see that. the banks are better capitalized. yes, the markets will be rough, by don't see having the same systemic problems we had when banks were far more weekly capitalized. >> let me push back here in business does not like uncertainty. as we have just heard about, coming out of the u.k., we are not sure who the government is, who the prime minister will be. both parties were in disarray. it appears that we will have month of not even knowing who is deciding, much less what they are deciding? does that necessarily put a chill on businesses investing? >> it does. it puts a chill on businesses

to companies-- outside of the eu, the eu was very business friendly. i think that forced us in the u.k. into recession. how does that uncertainty affect investments in the u.s.? one has to remember that the u.s. is far more -- international trade plays a far greater role in the u.s. than it does in the u.k. or europe. perhaps, in a perverse sense, people may start thinking about overseas operations, should i do more in the u.s.? the u.s. now becomes a relatively safer place. it becomes the better house, in a bad neighborhood, if it were, in the global markets. john, do u.k. is a relatively

small part of the global economy, but europe isn't. it is very easy to extrapolate the problems we experience it in the u.k. politically, and sending them across the whole of the continental. if we were to see fear gripping the eu and the idea that break up risks get bigger and bigger, that could affect the global economy. >> you are absolutely right. the big danger from this is if you had a spill over and if other countries decide to leave. you have to understand, it is a lot easier for the u.k. to leave the eu because it is not part of the euro mechanism. you have to look at the pain take.he voters chose to the impact on the economy if they were to leave the currency and how financial markets

been disastrous. if you like the risk of this whole event which is a complete breakdown in parts of the eu. the forces that led the british -- -- the immigration forces are probably even stronger when you look at the popularity of some of the nationalistic parties within europe and the fact that they have open borders. was insulatedast from that. also, you had to have a passport to get into the u.k. countries had far better control over who was getting into the country. you can imagine the forces are far worse. celebratingmay be this will right now. >> that is why this is so critical, john. i would love your insight on the following question, the domino effect.

do they have to make an example out of britain the same way they make an example out of greece. i wonder what you think. >> it could go one of two ways. you have to remember that the eu has a bigger stake in exporting to the u.k. than the u.k. has exporting to the eu. the balance of payments very so the u.k.europe is a fairly big market. they have to be a bit careful about getting into some kind of a trade war. you trade wisely. the u.k. contributes more to the eu's and they get out of the eu. in some ways, you can try to make an example out of the u.k., but the question is how much you shoot yourself in the foot. that is why someone like angela merkel is being far more cautious about what she is saying than some of the other people in germany that you are referring to earlier. >> i also wonder whether it has

the reverse effect. obviously some of the organizations like the national front have said, we want to do the same thing in the netherlands, in italy. on the other hand, the leadership and some of the more centrist people may look at england and say, if you asked the question you may get the wrong answer. might it possibly discourage further referendums? >> it will discourage people who are in power. i think it david cameron -- if considereron could again the decision to hold a referendum, i think he would take it back immediately. think about the equivalent -- 52-48% where the old wanted out and the young wanted in, you could not do that in the u.s. theneed to this majority of

houses and three quarters of the state. 52-48% does not cut it. bloody civila very war. and decided not to break up coming up, the former treasury secretary, john snow. secretary ofmer state madeleine all right joins us here on bloomberg tv. ♪

taylor: this is your bloomberg business flash. the panama canal newly extended

locks are being it not. a giant chinese container ship is the first to enter. the capacity double. chance canada is trying to recoup $15 billion for the obama ion ofstrations reject the keystone pipeline. the company argues that it had every reason to believe that the keystone pipeline would be approved. and, saudi arabia has fixed three banks to arrange the new bonsall, according to people familiar with the matter. saudi arabia is considering the cell of at least $10 billion next month. its finances have been hammered in the slump in oil prices. that is the bloomberg business flash. >> thank you very much indeed. let's carry on the conversation surrounding the markets.

. the s&p closed 2037 on friday night. what does it close monday night, do you think? >> i think we should expect, depending on some of the headlights coming out over the weekend, maybe some more weakness on monday. we should expect risky assets to soge somewhat of a rebound, to speak. the further you go away from europe, the more likely this is to fade in the near term. yes, it would not be the worst place in my mind, where fears will be expressed. >> where would be the worst space? sterling is obviously a big factor. where do you think the euro will work through next week? >> that is the right question. the main target here is europe.

the transaction that we saw on friday, with spain and italy being the worst performers, whether on a currency basis or dollar basis, is really insightful. in weak links are easily spain, for many reasons. also from the headline perspective and the risk management perspective, the ball is on europe's court, not so much britain. britain has incentive to slow somedown and keep vigilance around what will happen next. it is europe that has to make very decisive headlines and decisions and be very unanimous in its approach to this thing. it is in my mind that europe political risk that tries marketplace transactions in the next weeks. >> that is fascinating. coming into this event, you were

incredibly defensive. talk to me about portfolio construction. if you want exposure to the preferred, where would you play? would you actively go short and look at this position and momentum and say, there's a lot more downside? >> that is interesting question. as you remember from last week, we entered this event with a lot of hedges around it. . be continue to believe that -- would i increase my underweight, yes. the risk sense, yes. the good thing on friday that really struck me the most was the fact that emerging markets play.t act as a high data

that is true in equities. emerging markets proved to be more resilient than what you saw, for example, in 2010 or 2011 when the first stocks to europe came which tells us something about evaluations and the further you go from europe, the more you could feel confident about bottom fishing into the selloffs. >> i will ask you the question of last time you said this, do you really think that the heightened risk can be coupled? , guests.xically they have already decoupled for especiallyfrom dm, for talk about the performance of equity markets. it has been flat to negative depending on local equity markets and currency based equity markets while dm has staged an impressive rally.

decouplingsome more on that? what it could mean is large on emerging markets and somewhat flat to minor on the performance of emerging markets. that is still decoupling. in a normal world, emerging markets would have to developedrm the markets. in a normal world, young should be underperforming, but currently, it is not, which is a good sign. >> european credit had a price to book of .25. if that is not cheap, what is. ini am not an expert financials, by will say, cheap of practice to own, but it can get about cheaper. there is also something called a value trap. the problem you have is you have this npl problem that

will only get worse from the confidence standpoint. i cannot see businesses making any forward-looking investment decision for very long time. the ecb will probably be throwing more steam into this, but that is not really market news. we know that. the question here is more around sentiment. unless -- site to be this, we have been talking about this for a long time. this is the chance went europe can come together and do a very serious fiscal policy plan to support the confidence shock that may result from this. this is not something that the ecb can fix. this is up to politicians. it is time for europe to grow up. here is a question for you. spreads blew out on friday.

the question i would ask of you is if they are insulated, the new proxy to play is peripheral banks. there is no one there insulating that. will that be the new proxy? go short because no one else can step in. if you want the free market, a banks.arket, it is >> that is a very good market. i think spreads may continue to aken. it might be more managed, less volatile. the euro could continue to see some stress, but i think, paradoxically, emerging market currencies and markets in

general in eastern europe -- eastern europe markets and currencies are somewhat of a direct link. if there is some uncertainty around the eu vision, what does that make a poland, hungary, czech republic? athe is portfolio manager oppenheimer funds. really good to have you. david: a very good conversation. think you are coming up in just a few minutes, right here on the set is going to be a special edition of bloomberg markets .ith vonnie quinn welcome in on a sunday. we are starting to get ready for the markets opening tomorrow. what will you be doing with your vonnie: program? we will be looking at the options. we will have the director of the earth institute. a lot of these plans sound amazing, but also, really difficult to implement. one idea is to end the syrian

war immediately. david: i am in favor of that. vonnie: exactly. george soros as well with a similar type of recommendation for fixing this. others the, there are problems with the european union as is and they need to get fixed, so how did they get fixed? also, we'd look at economic growth in the u.k. goldman sachs down all the way from 2%, a massive decrease. talking about where rates will be going. we also found additional amount of bonds going into negative territory. and, special elections also taking place. david: a lot to cover. make sure to tune in tomorrow for an hour-long conversation with former federal reserve

chair, alan greenspan, right here on bloomberg tv. much more coming up next. ♪

david: welcome back to bloomberg . a special edition here. guy and johnson, i will say, i came back early from the beach -- no big sacrifice, buy one ticket back to this -- i was with a senior executive of a bank who say what you are seeing in volatility is the lack of shock absorbers. there's not a day that goes by that he and other bankers will be in positions to absorb other volatility. conversation to a we had earlier. the magnitude of the move on the pound is much much bigger. as you say, market structure has 1992 andadically since the move was much more emphasized because of that.

>> i would say the size of the move is what david is talking about, the lack of the quiddity, but it works. the market came through and actually delivered a result. was reported. i have to say, there were people that up for this. >> usually you hear about the witness before the losers. >> i would agree with that as well. much.you very coming up later, former u.s. secretary treasury john snow will discuss the impacts of the brexit vote. ♪

mark: welcome to bloomberg markets. vonnie: live from our headquarters in new york, i am

vonnie quinn. this is a special edition of bloomberg markets. ♪ are going to take you from london to new york to dubai in the next hour. here's what we are watching. turmoil engulfing politics as the u.k. votes to leave the european union. many of jeremy corbyn's cabinet members are stepping down today. there may be more to come. mark: and 2-2 $.5 trillion in global equities lost on friday. the losses continuing in the middle east today. we will examine the carnage and get you set up for what could be inwild day on the markets -- the markets on monday. vonnie: central bankers meeting today and the rest of the week