♪ >> welcome. county you down to the european equity market open. guy: i am guy johnson. george osborne has broken his silence. he says it can only be triggered when u.k. has a clear view of what it wants. the pound continues to plummet. are the markets overreacting to the brexit aftermath? spain plays it safe. was it the brexit turmoil that's won the election for mariano?

ago, just under half an hour until the european equity markets get going after what was such a tumultuous friday. what are we going to see this morning? maybe a little bit more of a call reaction. , we are at my footsie looking at a market that is cool down just 1%. we are off our loads and firming. it has gone down by 8/10 of 1%. osprey and germany, near half of 1%. easyjet warning on its earnings, cool down 5%. off by two pound percentage points today. it is the lowest sense

september, 1980 five after friday's 8% slump. the yen is a haven. the dollar has fallen against the yen 0.2%. interestingly, citigroup says we could see the dollar falls versus the yen. bien gathers its strength to hit gathers itsn strength to hit 95. we are seeing on market steady. the german bond yields diving lower. it yields in negative territory. we are seeing a flight to safety. with juliet.ws thank you, caroline. christine lagarde says the fallout from europe's vote to

leave the union hinges on what do today.rs she has urged calm. >> put things in perspective a little bit. there is a lot of either short rush to confusion, which i think his optimizes the thing to do at the moment. the prime minister has consolidated his position in the country's general election. with fromked insurgent political forces in favor of the relative security of the people's party with the u.k. endorsed by political, economic uncertainties. not to jeopardize the country's economic recovery. china's central bank has we akened. it is the most since august's devaluation last year.

the dollar strength surged following the u.k. referendum decision. anda wants to see a stable prosperous u.k.. brexit is making headlines in the u.s.. hillary clinton rushed out a tv ad attacking donald trump, golfg it would benefit his courses and scotland. trump called clinton "his disgraceful." " this is bloomberg. guy: thank you very much. let us talk about what george osborne has been saying. we finally got to hear from the chancellor. this is what he had to say. >> there is a volatility that we have seen and will likely continue to see in financial markets. may not have been expecting the referendum

results, but the treasury, the bank of england, and the financial conduct authority have spent the last few months putting in place robust contingency plans for the immediate financial aftermath in the event of this result. guy: chancellor also laying out the fact that article 50 should not be triggered until essentially the u.k. knows what it is asking for. judging by the political turmoil we see in westminster, we may be somewhere away from that. joining us now, the kick more -- luke hickmore. dan, we start with you. -- the market is down. overreaction? under reaction? give us the duration of what we're going to see. guest: we are in the first of overreaction.

withd a bit of practice corrections. the question is, do we think the parallel is what happened last summer? that lasted about 40 days before you got to a bottom. could this turn into something of a replay for 2011, the eurozone crisis? i think we shouldn't get too anxious. it could go on for several weeks. guest: i think that is fair. it largely depends what investors do here. said at best. if they start testing at liquidity with redemptions, that could be the next game. we have about the first seen it today. i talked to my colleagues in singapore. is a prettyindustry similar case to that. if that comes through and tests

that liquidity situation. classic.ld be a want to pick up with you on what is happening with the british pound at the moment. there is more pain being felt. when does this spill into potentially an uptick in the market? we saw the stock market being potentially outperforming on a general basis when you factor in the british pound, but as guy will say, when you put it into dollar terms, it was an underperformer. should we start to buy on these lows? daniel: i don't know if i would call it a buying opportunity. you are going to see the pound, the factor that it's the biggest negative impact in terms of brexit. we are looking to potentially $1.20.s low as

you initially get the benefit from a weaker currency in terms of higher sales or bigger profits. les tres, less investment, that is going to be felt further into the future. you get the short-term benefits from the equity markets and the weaker currency and the disadvantages from the decision perhaps will not be seen until later. weaker currency, yes. better performance for u.k. equities vis-a-vis the euro's own equities. guy: it did not in the run into the referendum. policynow waiting for a response system around the continent. we don't know what they will look like. we don't know who will be the next british minister. the market has not had a great track record recently. no, it has on. no, it has not.

new, uncertain environment, but it was not an environment that nobody prepared for. we had moved to remain. that was off the table very quickly. the situation where we really feel this has got out of hand. we'll know what is going to happen. the market does not know what is going to happen. the uncertainty around u.k. politics and economics, are huge. it is not disorderly yet. it is ok. guy: i'm not suggesting it is disorderly, just that the market is not great at reading politics at the moment and politics is going to be the ultimate definition of what happens here. according to you, dan, which is the market be looking at? it is pretty clear that politicians themselves don't really know what is going to happen. how do we read into the policy environment and trends forecast from it.

daniel: what happens next depends on the politicians. to some degree, it does not depend on the politicians. it depends on the voters. we have to watch that as well. what you're worried about is does the become a broader crisis in europe or germany? the way that would happen is through calls or more referendums and the expectations you would have other countries in europe. spain's vote in europe with that we don't necessarily need to panic on that front. we are watching the yields on spanish debt and italian debt as a trigger that the market is starting to get nervous about that. caroline: is there more pain to come? they were hit hard on friday. are we if the more pain for today? daniel: it is this trigger, this connection through the contagion. holland, also concerned at this point about the referendum in italy. the referendum for

constitutional reform, he will step back. that is where you worry about the market getting a little too nervous and starting to price in an exit. i think one thing we need to keep in mind to calm the markets , one spanish election was a move toward the conservative side. it is up the first time we have a new government in italy. it is the status quo. from our view, we don't expect that type of contagion. you will see that impact on european financials. guy: interesting that we have a bloomberg story coming in. as is being reported that in the newspapers over there. the financial sector rattled and the commission and the keenly aware of that. thanks very much. nice to see you this morning. more is going to stay with us.

safety in this weekend project general election. we are live in madrid,. ♪

caroline: welcome back to "on the move. " prime minister mariano rajoy has consolidated his position in spain's general election.

in favor of the relative security of the people's party. with the u.k. engulfed by political and economic uncertainty, spaniards bought into the call to not jeopardize the country's economic recovery. him?exit really win it for >> i think he would take issue with that pointing out that he december'sty won elections. even though they proved to be inconclusive in their ability to form a government. were prettypolls white at the market, they always had his party being the ultimate actors. there's something for the fact and there was surprise shock throughout europe. his argument not to jeopardize the economy -- the recovery. giving the job to someone who knows how to do it, that might

have ultimately found a purchase with some of spain's wavering voters. he was all too happy to lap up the adulation of his party's supporters. >> well, friends, we have won the elections and will claim the right to govern precisely because we have won the elections. what we have to do is be useful for all the spaniards, those who voted for us, and those who did not. is the easy bit. now, he just has to try to form a government. yeah, which we have already indicated is going to be a pretty tough thing to do. it is interesting to see how has. ripple effect brexit issues we have been concerned about is the negative reaction to the brexit from continental meters, and they are -- continental leaders.

you can discuss results will calm them down a little bit. respect.ve got to get, you comeu across a tried to punish her own population for wanting to make a choice? a verye got a plot careful course here, the politicians. for the market, it creates more uncertainty. , things that on down on thatgs front. it is still all very early. caroline: luke, we in berlin have merkel calling an emergency meeting with the leader of italy and the leader of france. how are you expecting the rest of the eu to react? what do you need to hear from the rest of the eu?

for the buying opportunity? >> we are seeing europe there are a lot quicker. we have got no real idea yet when that is going to happen here. anyway, europe seems to be ahead of us a little bit in terms of preparing and getting out there with the news and being prepared for negotiations to start. that is what we need. we need to start seeing how this is going to come through. how it is going to impact politics and how it can feed through in terms of the economics in the long run and how long it can take. that is crucial for us in terms of the kind of uncertainty we could get. that is missing the market just does not like. guy: when you look at where this is being priced in at the moment. we do this very clearly friday. the financials are going to be under pressure. we are seeing peripheral bond years blowing out a little bit. how far is the market third is trained in this absence of sort

of clarity? tois such a hard thing judge. don't get too far down this road and believe it is all doom and gloom because then ultimately, you could be wrongly positioned for situation that looks a little bit more rosy. how do you balance this one? daniel: luke: it feels like people are still luke: hunting down the opportunities. there are bigger risks around. the market is a different price. that is all right. if we get to the point where people start really worrying about that environment, actually selling and testing the liquidity we were talking about, that is the thing i was worried about. that uncertainty, as it comes through, that could be what causes it. have we got to the end of this? no. will we see the markets go lower? that is almost inevitable. guy: what is the negative scenario here? the eurozone breaks up in the eu collapses. that is a very major event that would take place. i'm just trying to understand

the spectrum about computer. ket is looking at. luke: if we want to trade with europe, passport our banks, we have got to join in a european free trade area. that is a negative action for the u.k. in terms of what expectations they have. a mild one. that would not be too bad. things would not change dramatically. the really cap outcome is that we don't get the negotiations going in time, trigger article 50, but never get to the end of the negotiations and get a hard leave after two years. nobody really knows what the environment will be like after that. a job as a lawyer, it is going to be a phenomenal couple of years. guy: career advice as well. luke hickmore joining us. he is wind is they with us. that she is going to stay with

us. we preview what the banks are in for for monday. post brexit monday. ♪

guy: 7:53 in london. a: 53 in berlin. let us talk a little bit about what is going on in the markets. let us check in on what exactly is going on in the markets. it looks like it is going to be

opening down again. 1.5%ve probably got a selloff. talk a little bit about the financials and show us what is going on here. it fell, as you can see, but .4.46% this after the brexit news came through. as you can see. across the continent, some very big drops, caroline. caroline: we could see yet further pain in particular for the housing market today. it falls down as much as 15%. friday. on more pain as they come out with their earnings. assets are set to go lower. easyjet sounded the alarm bells early this morning, saying they are cutting their revenue per seat going forward. seems as though they are seeing the issues surrounding strikes and whether the uncertainty that happens with brexit.

three to 5% lower. let us get back to luke hickmore. area, sector, are you most of verse from at the moment? is it the housing sector? should we be seeing this amount of pain? luke: housing is one part of that. financial stocks are going to be feeling the pain. we have watched consumer quality get better and better almost to the point where the only place it can go is down. higher inflation, all of this eighs heavier and heavier on this consumers. are more than likely ok. property is definitely one of them. i think probably most of you know will have that kind of idiosyncratic story now. guy: we will stick with that sort when we come back.

luke hickmore joining us. ftse 100 is down 1%. ♪

guy: good morning. you are watching "on the move." i'm guy johnson and we are moments away from the start of morning trading. caroline hyde has your morning brief. caroline: the silence is broken. article 50 should only be triggered when the u.k. has a clear view of what it wants. the pound continues to plummet. are markets overreacting to the brexit aftermath? and spain plays it safe. turmoil butrexit small the election for mariano rajoy?

the biggest news of a stoxx 600 since october 2008. reporter: i think it is interesting. futures are bouncing all over the place and the market is finding it very difficult to price this one. five seconds to go. there we go, the market is now opening up. i will now slide in a different board. we are expecting a negative start. this is the ftse in white, the dax inblue, and the purple. how are they going to open this morning? well, it looks like we can see negative start to the session. i'm going to zoom in and see what is happening on the one day to give you an idea of what is happening. we have a bit of breaking news as well. let me bring that to you as we watch these markets open. a $44 billionay

injection into the financial sector. i wonder if they will get more action there from the commission now that we do have this brexit and the financial conditions are changing? this is where we can see the open in europe this morning. we did rally at the close this friday, but we are now continuing to drop. you can see a significant drops with the cac and the ftse 100. let me get a board up of what is happening with the financials in italy. 2% as we is up to present speak. nejra is standing by with what we need to know. nejra: i looking at the imap to see how the sectors are performing. it looks like it is red across the board. banks and insurance companies were particularly punished on friday, when we saw the benchmark drop the most since

2008. now,stocks are down right followed by industrials. utilities are the best performers there, though they are still off by .2%. that is how the sectors are shaping up, but it is red across the board, all of them declining on the stoxx 600 at the moment. i want to take a look at the u.k. 10 year yield. we saw this dropped to a record low on friday. at the moment, it is down three basis points at 1.06% as these gilt market open up. we are watching a number of stocks, starting i believe, with u.k. banks. as i was saying, we did see financials punished on friday. some of those banks extended losses in asian trade. barclays is down 4.5%. hsbcs is off by 2.7% and

is up by .3% of the moment. other stocks we're looking at as well this morning, if we can switch up that board. we're waiting for easyjet to open. now, it cited strikes in france and bad weather, but also said the boat to leave the eu will further curb results this year. we are waiting for that to open. in the meantime, you can see a couple of home builders there. they were the worst performers on the ftse 100 benchmark on friday. keep an eye on all of those stocks. caroline and guy? caroline: i will pick it up from here. we have some big news, as you just talking about. i am looking at the mrr function on the bloomberg when it comes to the stoxx 600. interestingly, among the biggest wallace, the swedish banks -- the biggest fallers, the swedish

banks in particular. cartels within truck makers, they will have to pay more fines. on the upside, the spanish lenders are up. it looks like they went for safety and indeed, the italian lenders as well. banco popolaire, it looks like it is italian and spanish lenders outperforming today. the really interesting is when it comes to the opening of trade on the stoxx 600. i think we should dig into what luke hickmore is expecting. it looks like spain really is giving cause for relief, and indeed, pumping in money from italy. you expect any more banks to be pumping in money into the central banking system? >> in a way, it has given them the excuse to get this done now. they have needed to be sorted out for quite some time now. they have been going through a lot of stress.

well. difficult as actually, pumping in the cash brexit, reflection of this is probably a great result for the italian banks in the short-term. long-term, they still need to get their economy sorted out on the supply side. that is the same for spain as well. it is good to see more conservative government come in and spain. a bit of stability will be a positive thing for everybody. guy: the italian banks got smashed on friday. so, 2% aims like a good result, but relative to where they are, it seems like banks able to talk about government ejections -- these stocks should be up by a huge amount. it is cheap. it might be a value trap. it is clear there needs to be some kind of capital injection. some kind saee

of financial aid for the italian banking sector. let's dig into the credit story. there is definitely got to be a fear that they would not issue equities. walk me through how the market will react to this. nevertheless, i am surprised the reaction is not bigger. >> you know, this underlying volatility will keep the lid on most anything at the moment. we have not seen the italian banks from the credit perspective in a long time. these moves in incremental steps, but there are still structural problems in the banking sector, which is so large, which, as a federal investor, i just can't go near it. guy: brussels has bigger fish to fry. we have the opportunity to get something through. we will wait and see exactly what happens. just a quick update, easyjet

shares up 9%. do you think there will not be a push. this could be the piece o f light that says, we believe fiscal policy should be expansionary. we think there is a reason to be able to justify this. you were thinking about exactly what is going to happen here. is that now the next logical expansion? maybe the next thing he does is say, we need to have a big fiscal push. >> draghi has been asking them to do this for many months. don't just rely on the monetary argument. but you have got to take germany with you on this. they have got to relax these fiscal rules. will they be distracted by trying to negotiate with the u.k.? it is too early to tell. i think it is still too early to get involved with spanish and italian banks. we need to get over this feeling

that they are just papering over the cracks. they are too many of them. bigger banks, but better quality and better capitalized banks, that is your answer in italy. we are not there yet. caroline: we had an earnings warning coming from the estate agent. we can see further drops of 19% on friday. we are down some 27% over the course of the one-month now. really feeling the pain at foxtons. it really does seem to be a u.k. asset ongoing, in terms of the push downwards. particularly in the housing sector. what does it take now for the united kingdom's economy to perhaps weather this storm? are you worried about george osborne coming out and saying he is there for the longer term? would you expect him to ride out what is going to be a tumultuous time in u.k. politics?

>> i think we will see george osborne with us through the conservative leadership election. we need stability in leadership somewhere in u.k. politics at the moment. you can help the consumer, but they probably will get this from the bank of england in july or august. we look at a rate cut, and that is a good double. bu-- a good symbol. but the same time, we are getting inflation. we have seen a 3% or 4% rise in inflation. thre price of living in general, that will hold back consumers as well. hohow you cure that is to get confidence back? but how do you do that if you don't have confidence from the politicians, which is what we need now? we have month of massive uncertainty and volatility in the mark. keep liquidity and pick up

long-term value when you see it. don't panic in this market, certainly. but it is a very good opportunity to purchase long-term stuff carefully. guy: the value trap, as they were talking about earlier. this is the u.k. 10 year over the last few days. this is the drop we saw in yield as a result of what we saw on friday. not the easiest thing to read. what weo zoom in on saw this morning. do you think the gilt will break one? >> i think we do, but inflation is going to not help here. it will keep a flaw where yields can get to it. if the pound continues to fall, it is hard for gitllts to get much lower. will make good&p on their promise of a rate cut.

i would rather be in the u.s. tenure treasuries. for spending so much of your time with us, luke hickmore. up next, the u.k. drifts away from the eu without a paddle. european leaders scramble for a unified response. that is next. ♪

guy: welcome back. you are watching "on the move." we are 14 minutes into the trading session. caroline pointed this one up to me at the break. we were closed friday, remember. as a result of which, the swedish omx and estonian omx, all trading down sharply this morning as they play catch-up. you can see a reaction i in the norwegian krona as well. the focus is represented on this gmm function for you. the pound continues to drop by 1.66%. gold continues to be bid. what is interesting is what is happening in the cbs market this morning. the u.k. and or to go, both trading -- u.k. and portugal, both trading lower. this is a reaction to the

spanish elections story. there is a crossover between the italy and spanish 10 years. you can see that here. the market is moving, trading at 1.52. 1.51 in terms of the yield. it is interesting to see what happens here when the italians make a big injection into their financials tha sector. here is the first world news. >> u.k. chancellor george osborne has spoken publicly for the first time since britain voted to leave the european union. excepts the process, but the process of exiting the eu will only be triggered when there is a clear view of the road ahead. my judgment, we should only do that when there is a newr view of newhat

arrangements we are speaking with european neighbors. in the meantime, and during the negotiations that will follow, 'there will be no change to peoplee's rights, travel, and work, or the way in which our financial system is regulated. >> and david cameron will address parliament today after a weekend of political turmoil following the vote to leave the european union. meanwhile, 1/3 of the shadow cabinet have quit, putting pressure on jeremy corbyn to resign. that leaves britain facing its greatest crisis in half a century with neither a functioning government, nor opposition. italy is considering injecting 40 million euros into their b anks, according to people with knowledge of the discussions. amount could also still

change. profit in italian lenders is being squared as they grapple with 360 billion euros of bad debt. the imf managing director says the follow-up from the vote hinges on what policymakers do i in the coming days. but she has urged calm. >> let's put things in perspective a little bit. there is a lot of either short memories or a rush to confusion, which is not necessarily the brightest thing to do at the moment. hasariano rajoy consolidated his position in the general election as voters back forces.from political with the u.k. and gul by inulfed uncertainty, the spaniards bought into rajoy's call.

global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. bloomberg. caroline? caroline: thank you very much. the u.k.'s decision has lit several fuses all at once. markets now continue to assess the full impact. implications for the future of the eu and global growth are yet to be seen. we are now joined by the president and founder of the eurasian group, ian bremmer. wonderful to have you on the show, ian. give us a sense. you think this is the unraveling of the united kingdom as it stands. are we likely to see northern ireland and scotland start to peel away? well, i think it is going to be a very long-term of unraveling. headedertankers

toward each other, you know they can't get out of each other's way, but it will be a long time before you see metal on metal. there is no incentive tomorrow to announce a new referendum. there were some polls this morning that showed 55-42 of scotts don't want a referendum right now. if it turns out the u.k. can't get a strong integration agreement with the eu, then the scotts, i think very clearly are going to have a referendum. the scottish national party will be very strong around that. northern ireland, i don't know if we see a referendum, but we see in our missed tensions dealing with the land border with ireland, which is now going to have to be policed in some ways, trading problems between catholics and

protestants. the money is not coming from the european union anymore. socially within the united kingdom, you have to imagine you will he a slow-motion implosion over the course of months and years. guy: good morning. it was going to provide leadership in europe? merkel?b it be angel and are people going to back her? ian: merkel is still the strongest leader in europe, but before brexit, it was pretty apparent that europe was not being led very effectively. it was going opposition to brussels, growing euro skepticism. that does not go away with brexit. it is actually going to intensify. and while merkel is the adult in the room. she is pragmatic, saying, we don't want to punish the u.k.

just for spite, or force them to leave immediately. we should give them some time. it is very clear the germans will be looking out for germany's interests. and so ultimately, i don't think germany is going to be able to ride roughshot over other countries. the politics for brexit are negative for the eu process. let's keep everybody in, even though it is economically painful. with brexit, they would be economic benefits for having integration, but the policy is, we have to show everybody this is not a viable outcome for any of them, particularly as you see the electoral process in places like france and germany. merkel is the adult, but she will not be able to get this done. guy: you think those who argue that the u.k. should be punished will take some heart from the idea that it looks like the

spanish electorate is moving towards rajoy as the result of the brexit? ian: i think that is a plus in spain. let's the wood happens in up -- let's see what happens in italy. if this was only spain, it would be great. but unfortunately, you just can't have only one datapoint. shouldn't the rise have meant that we should take heart there will not be a brexit? no, unfortunately there are 20 different countries moving in different directions, most of them moving away from integrated europe. there are so many risks in europe right now and you will not see all of them hit. it would have been great if we could have avoided the brexit risk. there are many more risks and some are going to hit. unfortunately, they are going to hit during a long and costly and

painful unwind. caroline: ian, what happens therefore, in terms of timing? you have france wanting to get the u.k. with the process of exiting as quickly as possible. you have merkel, she is going to try to get them on the same page about timing. should it be a slow process? should we have caution coming from merkel? or is quicker better? ian: well, it can only be so slow. cameron said to his aid yesterday, why should i be left with the difficult shit? he has no desire to negotiate that himself. i think everyone is going to give them until october, when a new prime minister and government is in place. at that point, the pressure from the european will be immense. osborne's idea that you don't need to do anything until you have clarity from the europeans -- maybe you can wait for a year

or two, that is going to be unacceptable to the europeans and they will make the brits pay. the u.k. will increasingly be irrelevant in the eu processes. maybe they don't have to have a vote, maybe they can have a second referendum -- that is all beautiful, but the fact is, the process has been set in motion. if the brits try to walk it back, the europeans are going to make it harder. guy: the flip side of that is, if the europeans make it harder, their own politicians are going to look at them and say, you politicians are out of touch. there is a very fine line that these european politicians need to walk. a sharply negative reaction, a fearful reaction, is only going to tell those who believe the eu

is not working that they are on the right track. ian: that is true and it is one of the reasons the europeans want this done quickly. brits are not the negotiating against one country, one party. you have east europeans across the board to look at this process and say, aha, the populists are already in power. and they are going to use their cooperation with merkel as an opportunity to ask for more goodies themselves on things like refugees, on issues like economic transfers, on issues around economic nationalization. this is not going to get easier. there is a reason the brits voted for brexit. europe was not working. these european governments -- it is not because they can't shoot straight. it is that the structure does not allow them to coordinate properly. there will be incentives, it

wouldn't it be better if we puld just work this out in a eaceful way. but they were not able to resolve the refugee crisis. she was not able to keep the u.k. in. there is no reason to believe she will be more successful in dealing with this unwind. in fact, there is every reason to believe the opposite. guy: ian bremmer, president and founder of eurasia group. thank you. up next, where does britain stand in the world following the brexit? we will be speaking to a foreign minister. right now, we can see equities starting to firm. this is the picture we can see in london. remember, the pound has been pummeled. as you can see, the cac is now turning into positive territory.

.1%, thoughow up by it is still below the 1000 mark. you need to price that in this morning as well. ♪ get ready for the rio olympic games

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party's on! know what your pets are up to with xfinity home. xfinity. the future of awesome. see the secret life of pets, in theaters july 8th. guy: muslim back. you are watching -- guy: welcome back. you are watching "on the move." comments that may or may not have been made by the cameron team. i went to apologize and say, that is not our view of how things transpired. let's talk about how the markets are trading right now. we can he a certain arming of these three. -- a certain firming of the story. on the continent, markets are firming. it dax is now flat, trading

9564. the financials, leading the charge. this, on the election results. retaking the 8000 level, the ibax. caroline: i have got the mrr function up here, but the stoxx 600 is your best performer. remember, it fell 20% on friday. and phenomenal volumes still happening on the stoxx 600. youre up 363% on three-month average. we have got easyjet, though, your worst performer down 10%. there was a profit warning come out from easyjet. now, i'm sure the volatility in the u.k.'s economy will not bode well for the airline as well. spain is outperforming. guy? guy: caroline, thank you.

george osborne says market volatility is likely to continue following the brexit results. and the british economy will have to adjust. he says they should withdraw when a firm plan has been established. >> only the u.k. can trigger article 50 and in my judgment, we should only do that when there is a clear view of what we are speaking with our european neighbors. in the meantime, and during the negotiations that will follow, there will be no change to people's rights, travel, and work and to the way our goods and services are traded, and to the way our economy and financial system is regulated. guy: george osborne, speaking earlier on. i will the brexit affect how the u.k. is standing on the global stage? good morning. who speaks for britain right now do you think? >> i think that is difficult.

david cameron remains the prime minister and when the u.s. secretary of state comes in today, it will be david cameron, or at least his foreign secretary, whom he will first see. but rarely has british politics then in such a flux. really have people been so confused i the question of, who was in charge? guy: on the flip side of that question, who speaks for europe? >> well, that is an old one in terms of politics. henry kissinger, when he was secretary of state. "who do i call when there is a problem in europe?" i think the answer is principally, angela merkel. but in that sense, europe clearly does have its act together at the moment, more than london does. caroline: give me a sense of where you see eu negotiations going with the united kingdom.

italy and france want to erase this through a quick divorce. where is germany, angela merkel to takeicular, wants things slowly. what will david cameron say on tuesday in brussels? >> in a sense, europe is divided into two camps on this. thiere is huge frustration wheret many europeans, they have had to put all european policy on hold during the course of what they saw as an internal tory party. first, civil war and that he massive gamble that was lost in terms of the referendum. one camp is determined to get back to business and believes that europe needs to roll out decisive action of its own. the other side, led by angela merkel, is more statesman-like

and cautious. they believe if there is time left in britain for the dust to settle, they should have a mild exit, one where we stay in the single market and therefore, we will accept the rules from europe that we can no longer influence directly. i think this is -- between those who like to put a worm on their quickly ancatch fish those who like the long and patient salmon fishing technique. we will have to see which one triumph. -- which one triumphs. guy: i'm sure angela merkel love ses fly fishing. nevertheless, there is clearly a desire that there needs to be reformed. can you reform a bureaucracy? you have considerable experience dealing with brussels. >> i think it reforms because of

the outside political pressures. again, in a sense, there is a gain two camps in europe. with the reports this morning that a paper has been circulating by french and german officials, which call for a much tighter political union at the heart of europe. that is perhaps just a handful of people. in the other group, which says, the lesson of the brexit, which could be followed by similar right-wing called referendums in france or italy, is that we have to have a much looser europe. we have to have much more of just a single market structure without so much overhead. europe has got to sort itself out on which of those two visions it believes in. caroline: do you think we could see the eu having a domino effect? would other countries actually leave? >> i think there is some risk of

that. the idea that europe is an absolute permanent edifice. britain stands unshaken -- i think that is wrong. britain may or may not be as big or small a power as different people say, that the truth is, britain's withdraw from europe will shake europe to the foundations. caroline: which country -- guy: sorry, caroline. caroline: which countries? >> well, i think the countries that -- it is the northern europe economic reformers like the netherlands, like sweden, in a way germany, though it is a separate case, certainly denmark, which are going to really reflect on this. and think we can just plow ahead as we are. r vulnerable country is italy.

in italy, the opposition politics is now all about you know, a similar strategy to britain of not necessarily with hdrawal, but a new loos your.et-based ue -- based europe. guy: what countries do think would be members of that? will we just end up with a series of concentric circles emanating out of that? >> it would be very much the original countries of europe, the original six in a way. guy: including italy? >> well, i think it would face a lot of internal opposition. and in the local municipal elections two weeks ago, the opposition did very well indeed. but i think it would be germany,

the netherlands. but in that group of countries, particularly the netherlands, you have a lot of internal opposition, a strong right-wing party opposed. so, division between luther europe and a more tightly centralized europe is not just a rift in the a parties. in that sense, we will have to see where things settle. if it did go that way, we would he concentric circles in europe. europe survive this, do you think? >> well, for now. guy: there are some areas that have had cause financing, etc. and then there are countries within europe that did not have that kind of transfer mechanism that would exist. >> it would be tricky, but i

think they would limit the core activities to political, and not financial and economic. they would do that precisely to address that. you could be a member of the eurozone and have full rights on economic matters, but you might not be a member of the political group. , veryark malloch-brown nice to hear your thoughts. i'llmark malloch-brown, get that out. up next, the brexit summit. the eu scrambles to come up with a unified response. we speak to advisors within the german government in berlin. that is next. ♪

guy: welcome back. you are watching "on the move." the spanish market is up very strongly. now, let's talk about what is happening inthe oil market. turmoil market following the decision to leave. friday, it lost as much as 6.8%. let's go to abu dhabi now. give obviously seen oil take a hit in the wake of the brexit decision. walk us there how that is

happening and how that ripples across and two other assets. >> i think we can attribute this to two things. with you seen this general riks off sentiment in the u.k. that generally hits risky assets, including u.s. oil. the u.s. dollar is also up on the back of safe haven flows. we as a general concern over the free flow of capital, goods, people, all of which would be expected to hit demand for oil. a couple of banks have started to ratchet down their forecast. merrill lynch said a u.k. recession could happen faster than anybody expected. all of those things combined would be expected to take a hit to oil, at least in the short-term. when it comes to other asset classes, you have to remember the positioning of investors. we saw investors going long into oil over the past couple of weeks. there was a 4% increase of net

longs going into friday's decision. that means people have to square away those positions in light of friday's move. not outside of the historical range for crude, but definitely painful if you are long. caroline: tracy alloway in abu dhabi. andramifications of brexit, now european leaders begin their own brexit talks this morning. angela merkel is discussing this further. an advisor to the german economy ministry is joining us now. thank you very much indeed. give us a sense. what i am intrigued by, hollande was always meant to be meeting with merkel.

should we interpret there is a concern with the access of france and germany? how strong is that relationship? >> i think we have seen this slightly different perspective between france and germany taking on how to react to brexit. france wants an immediate triggering of article 50, this exiting procedure. and merkel has made it very clear, let's staky calm. let's not trigger article 50 immediately and perhaps, the british people might stay. she would like to have a three-way negotiation. caroline: there is also some path of argument within germany itself. she had to almost reign back steinmeyer. . we also heard from schulz, the president of the eu as well. how much of an argument is there in germany as well? >> there are tow perspectives.

on the one hand, you want to end uncertainty. now, let's trigger that procedure and get it through as swiftly as possible. on the other hand, it is important for germany if britain wants to stay, if they want to find a way out. then, obviously, this is a good thing for germany to have and this is why merkel wants to wait. can i explore, what is happening within these countries and the relationship between them? do think this will hasten calls mfor more europe? a guest suggested this could be a catalyst for a political reunion are we taking that too far? >> it will be pressures in that direction, clearly. we have angela merkel and hollande thinking about deeply integrating the monetary union and moving ahead. on the other hand, we know that in many countries, there is a

potential euro skeptic movement thing strengthened by the brexit referendum. we look at older's i -- we look at builders in the the. -- in the netherlands. if you start to push further, there will be people saying, you messed it up with the united kingdom. don't mess it up here. those two could neutralize themselves and i think we will see more integration or less. caroline: give me a sense of what happens. when you were talking of germany, thinking that the u.k. might stay, is germany expecting a second referendum? are they expecting a half cutting of the cord? or could this all be undone? >> it is very difficult to unscramble scramble eggs. out of thetain

brexit, that is much more complicated. i think it is very tenacious. so, it is not very easy to say from one day to the next, you are out year process, a lot could happen. it might well be that the british people realize that with a big recession and a big turmoil in financial markets, this was not a good decision. i think it was a bad decision for the united kingdom. so, why not reconsider? i am saying this is at least one option that is still on the table. not giving the u.k. much better deal than the other countries have, but perhaps saying, if you want to reconsider, why not? caroline: will the future of the european union remain 28? will it be 27? that this create a domino effect? -- will this create a domino affect? >> i might be an outlier with my

position. this is a decision by the british people. i think the european union will have to move into a two layered system. one, the deeply integrated core. and then a wider set of countries that could one day include also turkey. perhaps if one country once to move into that camp. norway, switzerland, perhaps the ukraine one day. but whether the outer circle as part of the treaty structure of the european union, or outside of this treaty structure, that is something we will have to discuss. caroline: thank you for giving us time today, professor enderlein. cloud hangs over investment banking as it enters an era of turmoil. we will discuss which part of the business has been hardest

hit by brexit. ♪

guy: welcome back. you are watching "on the move." we continue to see departures and announcements. jeremy corbyn, the leader of the labour party, has announced 10 appointments. this of course, after dozens quit yesterday. there,of names in

interesting to see what is happening now. worth checking that one out, i can assure you.; the u.k. chancellor says contingency plans are in place. warned market volatility is likely to continue. let's bring in bloomberg u.k. banking director. the first thing that was pointed out to me this morning, there were just pages and pages of bank analysts coming out and taking the red pen to all of their numbers. it is absolutely brutal. >> this morning, absolutely cataclysmic for the u.k. banks, certainly. but not just the u.k. banks. the u.s. banks, earnings downgrades for deutsche bank and credit suisse. we have seen a delay to an ipo ork thisand tnew

morning. -- and new york this morning. caroline: which parts of the business are going to be hurt the most? which areas within the u.k. banks will be feeling the biggest hit to revenues? >> the hardest hit areas are two fold. on the domestic side of things, we have the consumer banks. but for the investment banks, it is really the primary issue. debt capital markets and equity capital markets. who knows what other deals are in the pipeline, it is not really clear. but also, turning volumes on the flip side here, are perhaps positive. we hit the next are trading volumes and extra volatility. it is a bit of a mix, but generally, pretty negative.

in this morning from the italian government. it is certainly needed in the italian banking sector. european banks are in such a powerless position as it is today anyway, that this whole brexit turmoil adds to what they are coping with. guy: great stuff, richard. thank you. now, stay with bloomberg television. is "the pulse." but before i hand you over to francine lacqua, let me give you a quick look at the financial markets. following friday and the huge drops we saw, we are continuing to see selling. the ftse 100 is down by 0.5%. the dax is down by .2%. the standout story is what is happening in the ibex. 1.9%,rket there is up by

just dipping below the 8,000 level. that is it from "on the move." up next, "the pulse." ♪ .

>> that investors continue to punish the pound. plan that the u.k. chancellor will break the three-days silence. cameron speaks later today. what is legal, what is possible, and what is desirable. can the center hold? the hasty divorce from the eu.