jon: we will take you from london to portugal and new york in the next hour. the u.k. labour party leader loses a no-confidence vote. we will speak to the ecb governor council member next. markets rise after the brexit. sherry: we go live to aspen and erik schatzker will sit down with cyrus of vans within the hour. we are halfway into the trading marketset's go to the desk.

we are finally in the green so how are we holding up? julie: we are not making up the losses we experienced in europe or the u.s. over the last couple of days and stocks are coming off their highs to some extent but it's a healthy rebound today. the nasdaq is leading the gains. we saw strong selling volume over the last couple of days and volume is still elevated in today's session but not as much as it's been. this is volume by group. trading by them is about 25% above the average. there is a big gain and buy them of the financials are you also the industrials. we have been watching bond yields. we have been seeing the reversal there as we saw a big drop in yields yesterday. mostly they are coming back up today with the exception of the japanese 10 year yield. selling within the u.s. and u.k. market is not the same magnitude.

we had a big sea change in the fed funds futures and the expectations for a rate rise this year. the expectation for a rise coming up in december and you see the plunge in probability. now is about a 20% chance of a cut in the federal reserve benchmark rate. it's a big change. some of theseke stocks that got hurt the most. julie: it was after a couple of days of selling soap banks sold up big and they are coming act today. the magnitude is not the same. technology shares sold off sharply and many of them have a percentage of their sales in europe. carnival came out with the second quarter earnings today that beat estimates so that is fundamental news. it was propelling the shares

higher but now they have turned lower. the company's forecast for the coming quarter was a little short. sherry: thank you. >> let's check in on first were news. courtney: hillary clinton paz campaign is blasting the republican-led committee report on the ben ghazi terror attack. the campaign says that the chief goal is to politicize the death of four brave americans to attack the obama administration and hurt hillary clinton's campaign. the report included as secretary of state, she should've recognized the risk to u.s. officials in libya. british prime editor david cameron is in talks with eu leaders about britain's exit. he's put reporters in brussels before the meeting began. >> i will explain that britain will be leaving the european union but i want that process to be as constructive as possible and i hope the outcome will be

as constructive as possible. why we are leaving the european union, we must not turn our backs on europe. y: nicolas sturges will go to brussels tomorrow to make her views known. removed from the eu would hurt the scottish people. jon: let's get to the breaking news -- lost leader jeremy corbyn a no-confidence vote from the labour party in the wake of britain's decision to vote to leave the european union. cqua. go to francine la it's not binding so i wonder if this will lead to his resignation officially.

rancie: this means we are seeing a fully fledged rebellion within the labour party but it will not mean too much unless he resigns and unless they have new elections and 70 else gets voted in. 172 people who were against him. 40 of his own ministers even resigned and 20 of them were in his shadow cabinet. in westminster, he was probably one of the most unpopular men now. he says he has base support amongst british citizens. year, he back to last got massive support and was voted in with 60% of the votes. if they have fresh elections, he said he would again stand. it could be possible that despite this rebellion at westminster, he gets extra votes. says the vote has no

constitutional legitimacy. i would ask whether this is or labour mp's are doing this under the veil of the brexit issue. ancine: this is what jeremy corbyn and his supporters are saying that it's the media against him. realized thate the campaign and living up to the vote that he is not up to the job because he was not or small enough and making sure that labour supporters knew where they stood in the issue. it's very clear that some within labor are hoping for a general election. if it were difficult for conservatives to muster support or if we have a controversial prime minister from the tories, maybe we will have a general election. the labour party is the main

opposition in the u.k. only want to make sure they have a candidate strong enough that one day could become prime minister and they believe jeremy corbyn is not that person. not resigns he will after losing the no-confidence vote. how will this play out now? what pushes this over the line to get a resolution? know.ne: i don't even if you have -- you need 20% of lawmakers that sign a letter saying they want this person. it could be one of the most popular labor people that designed so they could force elections. this is a man that had 60% of voters within the labour party. you are here at the time we covered it closely. of thege the membership

labour party so he is speaking who only have to pay three pounds to join the labor movement and he is seen as a rebel, a man of the people that speaks sense. it might reinforce his hand because they say the elites don't want him but the people who support labor in great written want him. it's in reverse but it's not clear whether he can be in contention at all. jon: we will be experts how to elect a leader in the coming months. thank you for being with us. ry: we are definitely becoming experts of everything in europe and the u.k. let's take a look at this chart. this is the u.k. market cap and what it's doing so far. we are seeing the pound gaining

with stocks around the world seeing a rebound after the initial shock. this is wreaked havoc on the u.k. market. the market cap was $2.78 trillion and was 15% less than the market cap of france and germany combined. if you compare that to what is happening in japan. their market cap is soaring. >> it seems clear the further away from that chart, the focal point of this issue, better things are holding up and there is strength in the yen. france and germany are better off than the u.k. but they are also dropping. the bond yield is crashing south of 1% yesterday. gilt yields go much lower. yields sovereign debt are so low, look at the dividend yield and how high it is. the spread is blown out because

gone lower ande prices are adjusted lower in the u.k. which pushes dividend yields up. it's my issue with this argument that dividend yield has gone up but its price adjusted to the idea that the dividend will get cut but that argument is not always hold water? >> it doesn't and people look at valuations in different ways. they can think about earnings yield and stocks. it's a metric that loses its usefulness. we will stay on this topic but coming up next with markets rising for the first time since brexit, we will get more insight on the challenges he head -- i had. ♪

oliver: you are watching bloomberg markets. stocks and commodities are rising today for the first time since the brexit vote. let's bring in the chief investment officer at thornburg investment. he joins us from santa fe, new mexico and thank you for talking to us. we are seeing some risk buying returning so how long will this last? >> i don't know, i think it will be up and down. i think it's possible there will be doubts raised about whether the brexit ever happened and that will be a source of volatility. the huge political uncertainty

in great britain and throughout europe will rock the markets. we can manage through that. liver: how much of this might be of reversal of trade? how do we distinguish between a shift in the actual fundamentals of the stock are good versus a short-term trade? >> we are investors so we try to look at the fundamentals as opposed to trying to gauge risk gone/risk off sentiment day in and day out. what you did see through thursday of last week was a buildup of risk on enthusiasm area the markets were up. all of the air when out of that the loon on friday and even more on monday -- that a on friday and even more on monday. all of the airs

went out of that balloon on friday and even more on monday. it has not changed the fundamentals much at all. is it because these investments are u.s. focused? it varies company by company. interest rates are down in the u.s. and pretty good for home depot. it's not bad, it is good. that's one of our largest holdings. if interest rates are lower and refinancing is easier, more people will add on and by building supplies. if i look on the other side of the world, our single largest holding is a stock called china mobile which is the largest telecommunications operator in the world, 800 million customers

, 225 billion u.s. dollars in market cap. ev is $160 billion in u.s. and 140 billion u.s. dollars of the bits off -- ibitah. up 400% and was there are 400 million of these customers and have added 400 million year to date. the average chinese mobile data unit or -- user, do they care about brexit? i don't think so in the dividend is over 3%. you are talking about byna, an economy plagued waves. there are so many risks out there. >> that's why we look at the fundamentals.

we like china mobile. one of the fundamentals as this is a company with 60 billion u.s. dollars of net cash. there is no debt. the consumption of their product is going up. it's a reasonable value so the fundamentals are good. there are two economies in china, the old chinese economy and the new china economy. china mobile is clearly part of the new china economy, the internet/communications race economy and that is emerging in a big and profound way and historically. it really transcends whether there may or may not be a brexit . ver: bringing it back to u.s. markets and european, we were talking about the u.k. yield. atre is a model that looks current earnings yield versus bond yields. are those valuation tools good

right now? >> i don't think so. i heard the discussion about yield. i think john raises a valid concern about companies in the danger of having to cut their dividends. we have seen quite a bit of that certainly during the financial crisis with certain banks that had to rebuild their capital ratios. in the u.k., we have a groupicant holding in bt which is the old british telecom but they have raised their dividend by about 10% and are promising to continue raising the dividend. i think they have a platform they can grow. they just acquired everything everywhere which is the largest mobile telecom operator in the u.k., 24 million branded mobile users.

they can market their fixed line broadband service, their pay-tv service, they are under 2 million pay-tv users -- they can market to the 24 million as well as to their 10 million landline users and they are the largest broadband into structure -- infrastructure user in the u.k.. they have customer bases that don't really overlap. yield, the 5% valuation is not so expensive, six times. eye of theg into the storm and the stock is down 24% on friday and monday in u.s. dollar terms and down 30% over the last year in dollar terms. but the business is growing. we like bargains. that's a bargain. sherry: thank you so much for

joining us. atis on investment officer thornburg investment management. next we will go to london. ♪

jon: you are watching bloomberg markets. special coverage on the british decision to leave the european union. the vote has reverberated across markets and central bankers around the goal -- around the globe have to readjust. joining me on the phone is the ecb council member and governor of the bank of austria. great to speak to you. >> hello. jon: thank you for joining. the first question is whether you see currently what you would call on warranted tightening of

financial conditions? of gettingre kind more quiet and more balanced. the markets have been taken by surprise. there was a strong reaction. especially with regards to banking shares. it was perhaps an overreaction but things are more in a quiet mood. decisions have to be taken now but they are political decisions. that's what is going on in brussels. it has to be decided at the next few meetings. jon: what will you be looking for at the next ecb meeting? the market is looking at peripheral yields. they have come back in since then but is that still the focus? do you look at rank equity and

stress? -- bank equity and stress? >> we have a nervousness in the market. insecurityime of that is always bad for the economy and bad for the markets. at the end of the way, i think there will be a distinction between different elements. obviously, u.k. companies and u.k. banks are affected. they are the most affected either this. of what kindatter of business model you have . investment banks will be had because in this time of , there is the typical

continental business of the bank will have no obvious effect generalperhaps the economic climate. the more sites you look at these things, the more differentiated will be your view. jon: from your perspective on the bond market, the ecb has done a great job of insulating the bond market from political stress. you still see that stress in bank equities. do you think the ecb is in a position to do the same thing with thanks that it did for sovereign debt? >> the ecb is in monetary policy so that's not our task to do fine tuning. we are also in financial stability. extent it concerns

financial stability, the ecb is providing some basis. day, thed of the market development is not directly influenced by the ecb. you will stay with us because we will continue the conversation on the other side of this break. york,rom london and new we will continue the conversation of coverage here on bloomberg television. u.s. equities are higher. conversation continues next. ♪

jon: you are watching bloomberg markets. i'm here in the city of london with my colleagues in new york. i'm very pleased to say that the ecb council member still with us, joining us from portugal to

have you on the program. i guess to follow up on the conversation we were having, the stress and markets, the nervousness, as you described it, and the spillover effects are limited. what i want to engage with you is what would force the ecb han to do more? think it is much too anyy to get into i details. we have to look precisely of what will happen. there is a very strong first reaction, i think, an overreaction now. we see, let's say of. let's say, a period. point of view of the ecb, we will watch this very

closely. it might be too early to talk about a monetary policy response, but what is quite clear is the consensus is that this will be damaging to growth in the near term. isld you say that consensus that this will be damaging to growth in the eurozone? atwe will, of course, look this closely. of course, it is something where different countries will be affected in very different ways. depending on how tends the relationship is, what will be the strongof devaluation of the pounds. instance, for my own country, austria, we see practically no effects on our

economic forecast. of course, other countries may be exposed to much stronger degree. we have to get an overall feel for the eurozone. mentioned thejust appreciation of sterling. euro-sterling has appreciated quite genetically. is that channel that the ecb still focuses on in a big way? >> of course. we look at this. you see, the exchange rate channel in general is not as important as it has in in past. this is especially true for our economic relationships with the u.k.. so, one really has to be very not to rush to some

conclusions. we are in the process of looking at this in detail. jon: one more question for you. there has been some suspicion that the ecb once again pushed to bero payments relocated from the u.k. to the eurozone. you think that is something that the ecb will push again on? >> it is quite obvious that if there has been a decision by majority of the british voters to leave the eu, that will have effects. it is not that there is something from our side that we are initiating, but it is quite clear that markets and institutions will react to this. jon: ecb governor and council member, great to speak to you again.

fantastic to speak to you, governor. thank you so much for joining bloomberg markets. shery: bloomberg is live at the aspen ideas festival. one topic that we are f followig is cyber security. one man working hard in the fight against cyber crime is the district attorney for manhattan. he joins our erik schatzker from colorado. a beautiful view you have. take it away. erik: cyber security is certainly one thing we will be discussing. good to see you here in aspen. i want to first start with public corruption. this up in court this week unanimously overturned the corruption conviction of former virginia governor, bob mcdonnell. what does that have to do with you -- prosecutors pursuing cases against officials. >> in one sense, i think will be

clarifying, which i think will be helpful. in this case, they said it was erroneous, it covered too broad of a category. it helps to define better the quid pro quos that the court provincial.be number one, i think it will force prosecutors to focus and more on specific conduct which are more clearly wrong and not the more general part of being an elected official. erik: you're not worried it will tie the hands of federal officials? >> i'm not worried. erik: corruption is corruption? >> i believe the standards being outlined by the supreme court really focus on what they feel is corruption versus political

conduct. at the end of the day, there will be plenty of corruption to go round. it will help avoid investigations and indictments that ultimately lead to reversal. erik: you were citing bill de blasio over allegations that they funneled money to state funded candidates. where does the investigation stand? cannot comment i on the precise nature of the investigation or where we are at this time. i say we received over photo -- a referral from the port of investigations. other than that, it is inappropriate and unwise to share details that may be nothing but something bad. draw connection between back, the case, and

citizens united. it seems that more than ever before the connection between money and politics is fraught and demand the focus of prosecutors like yourself. you find that public corruption is taking up more more of your time? corruptionhe public cases have been a significant part of the work you have done in the das office traditionally and over the last four years. i will say this, and i have said it many times. the state prosecutors, because of the state laws, and state procedural laws, art, in many senses, handcuffed to do the kinds of things that we would do with federal tools. unfortunate, i think our legislator foolishly has limited dasability of the 62 county to be full partners. state legislator. i have called on them to

repeatedly change that. what we got was not that much out of the legislation. erik: let me turn our attention to cybercrime. it has been one of your parties. what would you consider the biggest risk in the realm of cyber security? overthink the biggest risk all relates to terrorism cases, our ability to get into the devices that we are now incapable of getting into encryption. i think that is a very significant change. i have spent a significant thatt of time -- i believe the public does not fully understand the consequence of the reengineered systems is that in hundreds of thousands of cases around the country in state courts, the public would like to know that those cases can be fully investigated to get

the true facts. we are in a world where we cannot access devices that criminals used to communicate as we use them to communicate. i'm hoping and working hard to convince federal legislators to step in here. they need to set the ground rules going forward. they need to understand the consequences are going to be less security and the public ones that security. erik: to be clear, you want allow publicct to investigators like yourself access -- forcible access into someone's iphone, or any other mobile device? >> what we want is to have the access that we had up until september 2014. which is, only when a judge has reviewed an application for war for phone and when the judge

believes there is probable cause and signed an order, the order has meaning and apple is able to honor the judge's order so that it can be investigated. : whatwhat is it -- erik is that the companies like apple do not understand? >> i think they understand very well what they're doing. i do not think it is a question of them not understanding. tim cook has said that the iphone is ubiquitous. they have made a decision that haveknow better, that they the best view, in their mind, where to draw the line between public safety and privacy. i guess they understand the consequent is. : talked was about some of the investigations you are conducting and the trouble you have had getting further because of her inability to penetrate

someone's smartphone. i will give you two examples. one where we had access. there was a case that we prosecuted in northern manhattan . a gentleman had an iphone and was videoing his friends. he turns to the left. in the door was a man with a gun who shoots the guy who is videotaping it. he drops to the floor. the shooter is heard threatening anyone in the room to talk about what happened. we were able to get access to that phone and present the case to the grand jury. the shooter is now in prison. in today's world, the phone and the contents would have died with the shooter and we would not have been able to make the case. number two, take a case in louisiana. a young mother is with her daughter, she is texting

seriously on her device. the phone rings and she goes to and out of her daughter's vision -- out of her vision her daughter is killed. we cannot get the events that could convict the killer. be good if tim cook and others who run these tech firms and make the software that run them were to back down or would it be better for the public interest, for congress to say, this is the law of the land? >> i would welcome, with all sincerity, a dialogue on pathways forward. they have a business to defend and the business model to promote which is precisely why thing congress needs to be the independent arbiter of how we move forward in the world we are now in. erik: i'm afraid we have to

leave it there, we have some breaking news we have to get to immediately. .on: great work gdpo draghi set to set reduction for the next three years. cuttinghe brexit phot gdp by as much as 0.5%. also saying that it is time to he iss think one ability concerned that brexit with the two -- would be to competitive devaluation. much more on this detail and this bloomberg scoop next. ♪

jon: you're watching bloomberg markets from london and new york. i'm jonathan ferro with my new york. over in some breaking news in the last five minutes from an eu summit document obtained by bloomberg. buyer drug's comments in there. see gdphe is set to reduction over the next three oners, cutting the euroz gdp by as much as 0.5%. he is saying it is time to address the bank form abilities. he is saying the brexit decision would affect markets and he is concerned that it would lead to competitive devaluation. the big headline, the ecb brexitnt said to see the

phot cutting gdp by as much as 0.5%. reduced,ook of growth the question is, how do you follow it up and what is the monetary response? euroaw a retracement on -sterling, a slightly stronger pound and a slightly weaker euro, but no big moves on the back of these headlines. let's get to the other boards for you. equities have been on a firmer footing today with futures going into the open in your positive esroughout the day and equiti staying there. we are up by 1.1%. here in london, to point 64%. -- 2.6 4%. it is a weaker dollar story 133. with a pound at certainly, the headline, we finally get reaction from the

ecb president and his thoughts on what this means, the spillover effects from the brexit decision for the eurozone. according to mario draghi, in a document obtained by bloomberg, he is set to see the brexit phot cutting gdp by as much as 0.5%. guys, we spoke to a former tank is england governor about what .e has to say on markets it was fascinating. take a listen. >> nothing will change on the terms on which britain can de with the world for the next two years. take effect for quite a long time. the most in the effect has been enormous political turmoil. i think markets are reacting to that. queenhat was marvin

speaking with friends in the pot and tom keene -- francine lacqua and tom keene. long time to figure out. you get overshoots on the downside, overshoots on the upside. listening to him, he did not seem overwhelmingly concerned about markets. this is what he expected on friday on monday. the question is how long does it take to really shake out and is what we see on the screen today a sign of stability, or not? oliver: that is my question, whether or not this is a version convictedbeing -- mario draghi saying they will cut expectations for growth. these are the things that could continue to insert turmoil into the markets. shery: it is not just the months

to come, but years to come. there was a very interesting op-ed talking about the next three years. what happens in the summer of 2019? the u.k. has regained financial some national confidence, but the fact is the u.k. and eu, the influence, -- we will have to see other countries take over the vacuum. the u.s. not keen on taking over more international responsibilities. we will see some thing called the g0 world. jon: that marks up the market action and breaking news coming out of europe currently. mario draghi seeing the brexit vote cutting the eurozone gdp by as much as 0.5%. we can head over to brussels. ryan: i am joined by nigel europeanhe lead of the

independence party. he was one of the most vocal voices out there campaigning for the europeanxit union. think you for joining us. we just got some news over the last couple of moments. draghi, we understand, is going to say that brexit could cost as much of half a percent in gdp over the next few years to the eurozone. you see what has happened to the pound, are you a little concerned about the economic chaos that brexit has created? >> let's get a few things straight. sterling is down a bit. it has been in a bear market since july 2014. we have seen a declining currency for a long time. and 12% up from february.

let's get a perspective on the markets. mario draghi might have a point. if we do not come to a grown-up trade deal between the united kingdom and the eurozone, it will hurt the eurozone, which is why today, in parliament, i was urging a grown-up approach. ryan: he also said that he is afraid this will need to foreign devaluation, currency wars. experience, it says to me that the worst systems are not ones were currencies go down and then up. you fix currencies and people find themselves trapped inside an economic prison. that is what happened to greece, italy, spain. i would rather go completely against him, and see countries able to have competitive devaluation think it trapped. mark carney, you said you

would like to see him resign, why? thee is the governor of bank of england. move they say they may their headquarters from the u.k. are you concerned? >> where will they moved to? paris? i don't think so. the fact is, outside the european union, we have the opportunity as the united kingdom to become the competitive center of the european time zone. that is the opportunity. , they are saying if you want access to the market, you have to allow the free movement of labor, both of which, i'm guessing, are no goes for you. >> it is the biggest lie to have access to the single market. let's clear this up. ryan: equal access, as you have now. access.use the word

every country and the world has access to the market, the question is, on what terms? have tariffs and the cost of membership far outweighs any tariff benefit. my argument to everyone in this room today and this morning is they sell a 70 billion pounds more of goods every year the we sell them. why don't we have a simple free trade agreement between the u.k. and the european union? ryan: you were at the european parliament earlier today. someone took a job at you. he said, you that the campaign to exit the european union, and you are in the parliament today. he does have a point. you is your role here if want to get out of the european union union? war, we nowon the have to win the peace and make

sure the wishes of 17.5 million people are carried out. i will engage in the parliament until we leave but only as it relates to brexit and the terms of our negotiation. for: there might be a bid boys johnson. would you stand up for him? i have been a bit confused over the past few days on exactly where he stands. i don't care which man or woman wins the tory party leadership and becomes our prime minister provided they have first and foremost in their mind 17.5 million voters who voted to get back the ability to make our own laws and control our own borders. things are getting more difficult for jeremy corbyn. you think of the labour party gets a new beater that could execute the conservative party a run for its money? >> the irony is the people opposing corbyn are the same people that remained last week. corbyn, we know he is a lever,

get, he was forced by his party out of that position. ryan: donald trump was in scotland about a week and a half ago. he said that brexit is a great victory, not just for the u.k. but all of europe and the united states. what is the crossover, in your mind between the success that was had with the referendum and donald trump? >> the crossover is, i guess people like myself are taking on toficult issues and trying bury them under the carpet. there are some instances on which we don't see eye to eye, but he has challenge the consensus. antiestablishment. that is the same in the u.k., and what he represents indy u.s., even though he is a multimillionaire and has

given money to politicians from the beginning of time. >> yet, but he is up against hillary. she is the establishment candidate. what is the difference between what is going on in the u.k. and the united states? >> the u.s. is having a big political debate in the run-up to this election. the u.k. problems have been far more serious than the u.s. we have literally given away the control of our country, the ability to make laws, and open up the borders to a million people. in one way, trump is right. it is a seismic event, not just in britain and the u.k., but the world. ryan: a seismic moment that has yet to show positive effect on the economy -- >> last night, the prime minister's of new zealand and australia say they are racing to be the first countries to have trade deals with independent

united kingdom. less than a weekend. ryan: thank you very much. nigel farage joining us, one of the most vocal campaigners for exiting the european union. jonathan, back to you. jon: thank you very much. great work. nigel farage talking about ties the single market you. what i found interesting was the point on access. access to the single market. of course, anyone can have access to the the single market. what i single market. it is on what terms. that is what they will have to negotiate. nigel farage, the face of the campaign. i wonder how much his thoughts matter when it comes to negotiating the final deal, if we ever get one in the coming years. has been repeating time and time that the eu has more to lose hindering any trade with the u.k..

that is a point he has been making over and over. oliver: it feels that there is vacuum coming out of the eu. it is interesting that this dialogue is getting more attention. shery: let's head to the markets desk. we are still in green. julie: we are. it looks like the rebound machine today cannot be stopped after the steep decline. we have had the decline in the s&p over the past two sessions with 5.3% combined. ,ow, bouncing back just a bit specifically for the s&p 500 as all three averages rally. rallying -- at is utility stocks are even higher. they were lower earlier.

material stocks are down just slightly to day. you have energy, health care, tech, financials. by onethose groups up present as we see this rebound effect. also, we have been watching as money goes into stocks and is coming out ofbonds. at see the 10 year yield 1.40 6%, but only an increase in yield of two basis points. at 1.46%.ld banks today in europe and the united states have been a big part of the story, both to the downside and now back to the upside. arergan and wells fargo some of the large cap banks that are rallying. and i have been looking at the evaluation of banks. particularly for the u.s., you might want to look at some of these companies. spread betweene

banks to earnings ratio. the banks trade at the discount and it is just about at the steepest we have seen post financial crisis. it got to those levels earlier in the year and now it is acting year those levels as investors come in and start to take a nibble. oliver: we saw some breaking news earlier on revisions to five mariopects draghi. is that having an effect on the markets? julie: it doesn't look like it's having that much of an effect. reiterate, bloomberg learned mario draghi in the upcoming euro summit plans to say the u.k. vote could cut eurozone gdp by as much as .5%. right now it is 1.7%. here's the pound versus the u.s. dollar. we did not see much deviation in the trade.

euro-pound toat see if there was any reaction. the euro was already down versus the pound and looks like it took a leg lower. there are also etf's in the u.s. that track europe. these not seeing much deviation from the track they were already on. this index is just the eurozone and the vanguard ftse etf includes all of europe, not just the eurozone. both bouncing back today along with the rest of the markets. let's check in on the bloomberg first word news this afternoon with mark crumpton in our newsroom. mark: republicans on the house benghazi committee fought the obama administration for -- fault the obama administration for the attacks but the report produced no new allegations about hillary clinton's handling

of the situation. the attacks killed for americans, including u.s. ambassador chris stevens. a separateeleased report yesterday, criticizing a lack of security at the diplomatic compound, but saying secretary clinton never personally turned down a request for additional security. 86% of americans support banning gun purchases by individuals on the fbi's terror watch list according to a new survey. there is also increased support, 51%, for an assault weapons ban. more people trust hillary clinton to handle terrorism then donald trump. she leads in that category 50% to 39%. in spain, the acting prime minister is playing a waiting game. his people's party was the only group to increase its ranks on sunday when spain held it second election in six months.

he is expected to push negotiations to the point where the only option is for arrivals to support him or seek a third election. first lady michelle obama is in morocco today. it is the second stop on a trip to promote education for girls. only 36% of girls continues who'll be on the primary level in the african kingdom. the first lady's daughters and -- and her mother are traveling with her. global news 24 hours day powered by more than 2600 journalists and analysts in more than 120 countries. i mark crumpton, this is bloomberg. a mark crumpton. >> moments from now in brussels, david cameron will sit down for dinner with his eu counterpart to discuss written's exit. earlier today, he said exactly

what he plans to bring to the table. cameron: bridge and will be leaving the european union, but i want that process to be as construction -- britain will be leaving the european union and i want that process to be as constructive as possible, but we must not turn our backs on europe. >> the prime minister has his views but he won't be around after september. nigel farage has his views but it seems the leave campaign froze him out. so the opinions of those two, how much do they matter? say, nigel farage doesn't have any political power right now. it is true that a significant number of people who support him more people behind the leave campaign.

i think there's a concern not just in the u.k. but here, people like nigel farage down the road, they may be better than they have been doing in the past. after what we have seen in the last few days, i've said look, we are talking about half a percentage point of gdp being the growth, to which nigel said that could happen. the onus is on the european union to cut a deal where we get access to the free market and have those kinds of economic relationships that we need. draghi might have a point.

we don't come to a grown-up trade deal for the united kingdom and eurozone, it will hurt the eurozone. which is why i was urging a grown-up approach. ryan: i don't know if his performance in parliament can be described as grown-up. he calls most of the people in the european parliament eurocrats and said that they should cut a deal with the u.k. a you have a little bit of back and forth. that's the comedy and the entertainment. as far as you can gauge right now, it doesn't look like anything is going to happen until september. what does it matter? will something come out of this? about theink it is town. there's a little theater but it

is mostly about the town. what he's telling him is bear with us, here is what we want. is everybody in the room knows he's going to be out and there's a new prime minister and no one knows what that prime minister will want and how quickly they will want it. >> ryan chilcote, thank you for joining us from brussels. shery: we are going to move now to london because germany korman has lost a confidence vote. againstakers voted corbyn while 40 voted in his waiver. let's go to mark barton. can he survive as the leader? budging says he is not

and according to the rules, he doesn't have to. advisory vote. it is not binding. most of his party in parliament has voted against him and they have no confidence in him, not they might have two hold another election. if you remember the last time, he won the vote by 60%, by a landslide. caused by the way he carried himself during the referendum and many things he did not put forward enough to remain within the eu. what followed was a whole host, dozens of his front-line team resigned. as a result, it seems the parliamentary party has absolutely no faith in him. that if there is an

election, the labour party will be completely wiped out. i know you are a market sky, so give me your take on why we are seeing strength in the markets? and i go chamber as far as figuring out who is going to be in leadership here. what is going on? mark: september 9 is when we will know who the next conservative party leader is. that is definite. conservative mps will throw their hat into the ring and the leadership ballot will end by mid-day. by then, we should know who is in the ring -- boris johnson -- itt is interesting is that is the preferred leader of the conservative party.

stephen problem will throw his hat into the ring. the chaos ensues in westminster. reporting inbarton westminster. coming up, a technical take on where global stocks are headed in the brexit aftermath. we have some charts you don't want to miss, next. ♪

oliver: this is bloomberg markets. pond ino is across the

london. stocks recovering some of the losses from the exit induced nala till at the, but uncertainty is lingering in the background. do market technicals paint a more optimistic picture? we're going to ask our guest who joins us from his new york office. we see a little bit of a rebound here. what are you looking at from a technical space? guest: it is an ugly picture. markets were not expecting what optimism but i think is incredibly negative across the board whether it is political or economic. if you step back and look at the long-term chart for the s&p, our view has been and continues to offhere was a major low put the four-year moving average. pretty.week hit was not

here's a couple of quick points that are noteworthy. pulled back anywhere between 40% and 50% of the retracement of the move that was in place between february and june. nasdaq, 1100 on the russell 2000 were all key replacement levels. falls from theng dollar so what we are seeing is the three-day rule. be as we my bet would move into the long weekend and the beginning of july, you turn the page into a new quarter, markets are not stabilizing as we go into earnings. retreating after its biggest today start in seven years. does this mean that the rally is done now that the brexit vote is

done with? worth: we have two days of trading, so i would be careful to hang myself on a limb over this. my guess is you are not going to sustained gain and gold. i think it's probably more reef -- the replacement theme. see innear term, what i the dollar, what i see with the vix and the gold is a near-term positive. these: looking at technical measures, there are a few parts are on the 2040 and what is it, but going to take to take us above that area that has been so difficult for markets to stay above? is the resolving uncertainty going to do it or do we need to see growth from earnings?

robert: that is the million-dollar question. and what our view has been through 2016 is that we saw a cycle low at the beginning of february and our call was to stay optimistic through any volatility. that's a big window to give as you moved through all of this uncertainty into the election, markets are going to head to new highs. the real answer is that is just going to take some time. embracing the consensus negativity at the moment. shery: some people were moving away from europe but now focusing on asia, saying china. what is your view on that? robert: thank you very much for that and bloomberg had a great shenzhen index

which looks like it is beginning to bottom. when you look around all of the noise, here's the opportunity that some of the mid-cap stocks are just about to start an entire upside move. looks like a great opportunity. thank you for joining us. businessthe bloomberg flash, a look at the biggest business stories in the news right now. the owner at british airways say the tourism boom will upset the brexit travel due to the vote. it's nonsense to think people will stop flying and that the u.k. will be more tractive to tourists thanks to the falling pound. oliver: u.s. health officials have approved the first pill to treat all types of hepatitis c.

it is for patients with and without liver damage. first hepatitis drug with a new drug that attacks the virus using a different mechanism. shery: consumer confidence in the u.s. has reached its highest level since october, climbing from 92 point or 298 last month. that broke a two month suite. it is its slowest pace in two years. that's the bloomberg business flash. coming up on bloomberg markets, volkswagen sets and auto $15stry record with its billion commissions settlement. can they put their the emissions scandal in the rearview mirror? ♪

bloomberg world wide, this is bloomberg markets. let's check on the global story of what is happening across asset classes right here and right now. positive and the 2%. closed, let's call it the biggest drop on record with

a loss of 24 percentage points. we snapped back but barely. switch up the board and the fx softer story. the pound up why .9% in the euro north of 110. the yield on the 10 year is one .46%. let's turn to volkswagen who will pay almost $15 billion to settle claims they cheated on emissions test. means -- does that mean the w past problems are finally in the rearview mirror? relief?reathe a sigh of are there legal troubles? maybe brees an partial side of relief. they have this agreement with

linksys and with the department of justice. but they still have a lot of things left to go. they still have several penalties and injunctive relief, things the government can order them no longer to do. they also have a criminal investigation the doj took plane , so theyains to say still have quite a ways to go to get fully out of there legal problems. part of the issue is with a pollution control retrofit. are the people who own these cars, do they ultimately care about the cars polluting? they get the reward regardless of what kind of basement they choose. is there a chance.

won't have to shell out as much? on how manypends people bring their cars in to fix and how effective those fixes are. it's slightly more than $15 billion. that's only if everyone has an eligible car filled the back to volkswagen and takes the maximum amount of cash they possibly can. if people decide to have their cars fixed, it will cost a lot less. less ifcost a lot people choose to have them fixed. the question of whether people have to have them next is more of a delicate one. they will eventually have to have them fixed or traded in. continuet be able to driving them forever. no one can really force them to

turn them in. shery: volkswagen share prices are up. that means investors are happy. guest: this is the same number we reported yesterday. with of that has to do brexit, but the shares took a real pounding over the last you trading sessions and people were relieved that there were no surprises in today's announcement. still ahead, we are going to head to aspen where erik schatzker is sitting down with walter isaacson. ♪

?c+sv jonathan: live from the city of london, i'm jonathan ferro. oliver: let's start with the

headlines on the bloomberg first word news. party leaderbour jeremy corbyn lost a confidence vote. it wasn't close. 172 to 40. it prompted mass exodus from his team. he has been criticized for a lackluster campaign to keep britain in the eu. merkelchancellor angela has a warning for the u.k.. she told german lawmakers the u.k. will not get favorite treatment once it leaves the european union. the chancellor said she will make sure that the cherry picking principal will not apply in the negotiations. west urging a governor earl tomlin is seeking aid for his flood ravaged state. the number of counties in the request has been brought to 51 out of 55 in the state. flash floods have killed 22 people and stride thousands of homes and businesses.

rio de janeiro's acting governor says the olympic games could be a big failure. he says budget shortfalls may compromise security and mobility during the games. he says the state is waiting for an $860 million payout from the government and warns that without the funds come up police patrols may grind to a halt by the end of the week for lack of gas money. dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. back to you. the aspen ideas festival is underway in colorado, bringing together some of the world's most influential policy and thought leaders. erik schatzker is there with the host of the annual event, walter isaacson, ceo of the aspen institute.

it seems we are not getting through, but we are going to try to get to erik schatzker with walter isaacson. up, the three amigos of north america meeting tomorrow in canada. we will bring you a preview of what to expect. ♪

oliver: you are watching bloomberg television live from the aspen ideas festival.

i'm erik schatzker, here with walter isaacson. it is unavoidable. briggs it has to a degree hijack your event. this event has always been great , turning, pivoting and responding to local event and this is the biggest we have seen in quite some time. you are going to be talking to secretary of state john kerry in about an hour's time and exit is on the agenda. what do you want to know? big tremor and a we began the session by talking about how in 1949 on this very campus, some of the great institutions of globalism started coming up, whether was the world bank, bretton woods, the world bank -- the imf, and now the era of globalization seems to be over and that's because the belief in free trade, the free movement of people, immigration, that technology will make us that

are, that lost popular support. i'm going to talk to the secretary of state to talk about what you can make sure to make sure global capital markets are more inclusive. if you are going to keep leaving people out of prosperity, you are going to keep having exit votes. you used an important word -- seems. do you believe it seems to be over? walter: i believe this is not an aberration. people in britain and people in the united states are feeling globalization and trade and this whole notion of the free movement of people that helped the top 1%. it helped a lot of wealthy people, i can get a flat screen tv cheaper but on monday morning, i can't get on the bus and go to the maytag plant because they have moved it. erik: there has always been

populism, but it waxes and wanes. what happens if they flourished the way they appear to be flourishing in britain elsewhere? walter: the first presidential campaign i covered was john conolly. he was a great conservative populist and tried to stop trade with japan. population -- populism doesn't catch on but it is a little different now. if it continues to catch on, you will see nativism, nationalism, you will see a real crackdown on the type of flourishing free minds and free markets that all of us depend on to have an innovative economy. erik: you have hit on the key social undercurrents like nativism and nationalism -- walter: sometimes just racism. exclusion, inequality and

a backlash against the lead is an event a topic at like this. this event brings together corporate elites and political elites and the people who have the time and money to attend. walter: a lot of people in the elites, and i will include ago did notar or so understand the power of this wave and probably thought brexit wouldn't happen come a thought trump would not get the i think you have to examine some of the core tenets. you and i and most of our viewers here believe free trade is a good thing and it is a good doing. but when it takes the maytag plant out of iowa and sends it somewhere else, the people there don't realize it is a good thing and maybe we have to start re-examining not that trade is good, but that it has to be fair

, there has to be ways people get protected because even if you have a healthier economy, if you don't have a good job in good wages that you can be secure in, people are going to be deeply resentful and they are. erik: you spent a lot of your time thinking about policy and talking to policymakers. what are some of the policy oriented approaches that could be taken to solve this problem? even if a different approach were taken to future trade agreements, we are still living with the consequences of the trade agreements that are already signed. walter: trade has caused a lot of prosperity. inherent not problems just in trade. these are decisions we get to make. we want to take some of the this prosperity and

say let's do a massive investment in infrastructure. you have good in this meant -- good investment in roads and rails and it would produce large numbers of jobs. this prosperity and when interest rates are almost zero, you can get a at her return on investment. they say why would you tax me to do things like build better airports and better roads and create construction jobs? but we did things like create the internet, create the andochip, all of which came step one would be a massive infrastructure that's then sensibly, making investments making our transportation systems become as good as they used to be. schools in particular, it would be great to take some of this prosperity we have and make it so that everyone in america has an equal opportunity and not be number 20 in the world.

it's not as if we haven't been talking about these things. sense among the elites that you talk to that there's more than a recognition and an awakening that there is going to need to be some sort of redistribution through the tax code to connect and make the investments that correct the inequalities created by past policies? walter: i don't think that consensus has emerged. if you have a prosperity that is not inclusive, it's not going to be sustained. you are not just an author but a documentarian of historical figures. they've in cameron looks awfully bad right now. how do you think history is going to help judge him?

walter: he's a decent prime minister. he probably should not have called a referendum when it was going to be as divisive. and i includeus me in you in this. it looks like he made a bad miss take. i admire someone like david cameron who got himself in the arena and has been a steady steward and i think made a really bad mistake. don't think history will put him in the same group as neville chamberlain? walter: no. people like that, you still see history and a good thing about history is there are many drafts. it's like a leonardo painting. there are many layers that you get to paint over the years. it is the first draft of history.

here at the aspen ideas possible. that is walter isaacson. there's more coming. act to you in new york city. oliver: erik schatzker and walter isaacson in beautiful colorado. coming up, what does it exit mean for american companies doing business in the u.k.? that's part of our focus on farm a week. ♪

oliver: you are watching bloomberg markets. jonathan ferro joins us. it is focus on pharma week, where we are going deep on the global business of pharmaceuticals. concerns over brexit has hit the pharmaceutical industry and big

companies have the most exposure to a brexit scenario. mylan is exposed the most. david westin and alix steel spoke to the ceo and asked how the brexit affects her company. heather: our exposure to the u.k. is immaterial. everyone is taking a different slice of how far-reaching the brexit is affecting the entire euro market could be. when you think about mylan being the global company and we have diversified across 150 countries and thousands of products, that puts us in a sustainable condition. u.k. ally the beid: how important would it if mylan remained part of the single market?

heather: when you have something as complicated and intertwined as the euro has evolved, everything from the regulatory system to drug approval. when you think about the pharmaceutical industry, there is an impact on product than licensing. it's going to affect everyone equally whether they stay a part of it and do a euro agreement to be able to write -- to leverage the regulatory or if a breakaway. would not impact the products for the portfolio that we have in the u.k. part of a series of reports we are doing on bloomberg. i want to take a step back and talk about generics. mylan is a major player in generics. what role do generic pharmaceuticals play? they play aiously,

significant and important part of our health care system around the globe. if you start in the united states, generics have become the backbone of the health care system. we represent 88% of all drugs dispensed in the united dates. different parts of the world have different utilization rates, that every health care system is looking for cost containment and health care solutions. we work very hard to break down those barriers and divide access to provide affordable health care. there's never been a more important time, whether you are talking about emerging markets, developing countries, or throughout europe. to fight to have a more sustainable health care system in these countries. that was the ceo of mylan this morning. we want to let you know that bloomberg is presenting what we

are calling "focus on pharma -- going deep on pharmaceuticals and biotechnology's" with a range of stories. find more on bloomberg.com/pharma. turning now to canada where the prime minister and the mexican president met ahead of their three amigos summit with president obama tomorrow. the brexit vote is likely to dominate the discussion. what exactly is on the agenda? i think you can say the vote has ratcheted up the pressure on all three leaders to underscore there believe in nafta and the three country trading block. vote,cus was before the on environmental matters. the brexit vote changes all of that.

thegs like the failure of keystone pipeline, that trade deal will that has been signed by all three countries. they should drive home a message that free and open trade is alive and well in north america. we just mentioned that they are meeting separately right now. how are they doing in that meeting and in the next one? jamie: it might be a little less than accurate right now. they did agree on open access for canadian beef and visa requirements, but the subtext according to some is that mexico and canada are looking to strike a unified position as what they see as protectionism. nafta comes like

under threat or a trade restriction comes into being. be on thet would agenda and also trade, what else can we expect in the summit with president obama tomorrow? jamie: i think that will dominate the discussion. the environment is very much on the radar and aboriginal rights across the entire region. shery: thank you so much for joining us. time now for the bloomberg business flash, a look at them stories andst businesses is right now. mexico is expanding access to markets for canadian beef while canada relaxes visa restrictions on mexican travelers. oliver: alaska' $3 billion wealth fund is planning to

remove out side managers who choose hedge fund. they will rely on in their own -- and allow alaska to cut shery: amazon is adding 50 new buttons to its dash service. orders through the service they say rose more than 70% in the last three months. that is the bloomberg business flash. we've got a look at equities as we move into the fourth hour of trading. john: after a couple of ugly days on friday and monday, i can bring up the boards and get you up to speed. the s&p 500, on firmer footing.

loss friday, added into monday, down 5.62%. it was even uglier for the banks. these stocks eccentric banks finishing up. a softer dollars story and if you switch at the board, the cable rate pushed higher. up by .8%. a softer dollars story against the euro as well. creeping higher on treasuries, up by two basis points. the dollar story is absolutely critical. had aoomberg dollar index two day pop and you can see the ramifications from what has happened with the brexit vote.

how it goes into places like china, the biggest devaluation since august. on, riskyst for risk off very much here in the u.k.. shery: we see the shanghai composite and nikkei gaining and the hang seng going in the opposite direction. we are seeing a big reaction in the markets out there. the dollar have going up which is one of those areas they it they have been looking at. this is a potential fulcrum for markets as we look at earnings coming up this season. shery: it is quite interesting that we are seeing the ftse 100 index of mega-caps gaining and a week or pound helps.

john: many financials have said the same thing. saidme on the program and the majority of our earnings and there are a lot of companies listed on the ftse 100 that would experience the same thing. for investors in general, we are in a new paradigm and it is hard -riskentify classic risk on off signals. i'm not sure what it is with the focus on the brexit debate. if someone tries to walk back the idea that the u.k. exit the european union, every official that comes out does not expect that to happen. a new paradigm, just wonder how it is going to wash out. market clearing, it takes a while. obviously a bit of a

change of pace from a we have seen in the past few days. coming up, mohamed el-erian weighs in on the future of the u.k. and the eu coming up at 3:30. this is bloomberg markets. ♪

e

>> it is 7:00 p.m. in the city 2:00 in new york.

>> this is bloomberg markets. matt: live from london, i'm matt miller. david: here is what we are following this hour. markets are higher today following the brexit slide. bonnie: the u.s. commercial real estate market could see some bumps in the road. we will tell you which areas could be hardest hit. matt: nike reports earnings after the bell. the company is dominant in north america. be slipping as under armour makes inroads. david: let's go to the et