>> mark carney suggests action is on the way following the brexit vote. >> the economic outlook has deteriorated, and some monetary policy easing will likely be required over the summer. >> go for it. the justice minister sent out his pitch to be the next u.k. prime minister. japan's economy shows another lackluster month with inflation moving further away from the boj's target. is abenomics running out of ammo? ♪

anna: a very warm welcome to "countdown." i am anna edwards. it is just past 6:00 in the morning on this friday morning. let's talk about what has been happening with sterling. we heard from mark carney at the bank of england in the latter part of the trading day yesterday, and we can see the effect that had on the pound, not the one highlighted in red. yes, in fact, the one highlighted in red. there was little bit more stability coming through in the pound in the wake of the big falls we saw last friday. in the wake of that, we've seen a little bit of a recovery or stability in the pound, and that took another leg down as we heard mark carney speak. saying, brexitr may prompt summer policy easing. let's check out the msci asia-pacific, a decent session the last couple sessions in asia, and today, up by about

0.5%. is this based around for bets, more stimulus coming through from the central bank? we will discuss that. we've got silver in here, and that is up strongly, up 2.4%, the biggest increase in this week in more than a year on silver. brexit has been kind to some of these precious metals.dollar-yen , 102.89. this is set for its biggest weekly drop, that is the yen, since may. repaired around half of its brexit vote surge, which is quite spectacular when you consider the extent of the yen buying we saw in the wake of the vote. we will discuss what is moving the markets further in a risk-on progression -- direction. let's get the bloomberg first word news. here is rosalind chin. lind: data out of japan shows a lackluster month for the world's third-largest economy.

household spending stagnated, and inflation excluding fresh food fell 0.4% from the year before. the latest official figures show china's manufacturing sector treaded water in june. the pmi fell to 50, the dividing line between improvement and deterioration. as for the services sector, it continue to improve with the official gauge rising to 53.7. the justice secretary michael gove is set to make his case to be britain's next prime minister. that is after he betrayed boris johnson who pulled out of the race yesterday. now his sights are set on the home secretary, theresa may, the early favorite, and three other candidates to head the conservative party and the country. apple is said to be in exploratory talks to buy jay-z's tidal. sayswall street journal"

negotiations continue, but a deal is by no means certain. forl was bought by jay-z 2-d $6 million in march of last year. apple recently revamped the music subscription service. hong kong is marking the anniversary of its return to chinese rule. the chief executive led the ceremony 19 years after the handover of power. pro-democracy groups have promised demonstrations. they will be unhappy about candidates being vetted by asian before being put forward. you can find more stories on the bloomberg at top . anna: thank you very much. let's get the latest on the market action. haidi lun has an update.

when you consider where we were this time last week, we've seen quite an amazing rally in some thets in the asian session, equity markets, and even the yen. haidi: that's right. we have been saying this quite a bit. it's almost as though brexit never happened. we are back to where we were before the u.k. referendum. of course, other than the emotional roller coaster everyone has been on over the past five days. take a look at what we are seeing. we are seeing this rally extended into the last trading day of the week and the first reading dave the quarter. very strong gains. expectations of more central bank easing everywhere from the bank of japan, the bank of korea, already coming through with their fiscal stimulus measures, and also those comments coming through from the boe governor and expectations that the ecb will loosen in some ways in terms of the bonds they do. given that we had that fairly lackluster read on the inflation

particular and the survey, slightly better than expected, but in light of this yen situation and the weakness of abenomics, there's a lot more talk about what the bank of japan can do when they next meet. we are seeing gains of 6/10 of 1% when it comes to the tokyo session. we are doing well coming out of australia. they are off those session highs. we have the federal election taking place tomorrow. a little bit of risk aversion as traders try to work out which way that vote is going to swing. we've got a good rally coming through from south korea despite trade data showing that most a sense of stabilization. not much of an improvement. shanghai is lagging, up by 1/10 of one thing percent. it has been pretty range bound for much of the session. we are hearing expectations that will have to do something after those pmi numbers you just went through. matching expectations, but no

pickup, and a lot of analysts are saying there room for the central bank to move perhaps if we don't get the rrr cut or the wholesale interest rate cut. we could get targeted liquidity measures. we are seeing weakness coming through from southeast asia. malaysia is up i 3/10 of 1%. india, really extending this rally we are seeing, putting on another a tenths of 1%. foretty good way to add up a tumultuous week. anna: an emotional roller coaster. the bank of england has signaled a rate cut within months as it tries to shield the u.k. economy from the shock of leaving the eu. governor mark carney says he won't hesitate to act to shore up the system, and he is considering what he called a host of measures. the material slowing growth at the npc identified as

a risk associated with the referendum looks likely to be our central forecast. it seems plausible that uncertainty could remain elevated for some time with a greater dragon activity -- drag on activity than we could have anticipated. its effects will be reinforced by tighter financial conditions. monetary policy cannot immediately or fully offset the economic implications of a large negative shock. moreover, the future potential of this economy and its implications for jobs, wages, and wealth are not the gifts of monetary policy makers. these fundamentals will be driven by much bigger decisions, by much bigger plans that are being formulated by others. what we will do is to continue to relentlessly pursue monetary and financial stability, and by doing so, facilitate the

adjustments that are needed foristent with those plans this economy to reach its full potential. the economic outlook has deteriorated, and some monetary policy easing will likely be required over the summer. it would be irresponsible of me or any of my other colleagues to walk away from those obligations. those are our obligations under statute. anna: at the end of the question and answer session, carney defended the warning he had given in the lead up to the referendum. we said in terms of the risks to the economic outlook, in terms of the risks to financial stability, does anyone not think that those risks have begun to manifest? does anyone in the country think those risks have not begun to manifest? anna: with us to discuss, michael o'sullivan, cio for

u.k., eastern europe banking at credit suisse. talk about what central banks are doing to cope with the situation we find ourselves in both in the u.k. and more broadly. we have heard from the bank of england. what are your expectations from the boe? >> we have been through three phases. we are in the third phase of central-bank action. on friday, there was verbal intervention from central banks. utright had op intervention, the swiss national bank, perhaps the bank of japan, and the third phase is they are beginning to signal changes in monetary policy. that is increasingly limited, and they are running up against the limits of their own action. worry, a bit like the politicians, that some of the actions from the central banks will have negative impacts gone if you look at where the interest rate curves are getting pushed into further territory.

that is not an outright positive for savers, for insurance companies, the financial services industry. there is a well held view abroad that more qe is not what we need. it just stores up more problems. anna: is that what we are talking about? we had the chart of sterling during the press conference mark carney gave. the market factored in further assistance from the bank of england. what does that look like? as he said, he was channeling timothy geithner when he said "a plan beats no plan." he is sort of working in a vacuum. what will the easing look like? will it look like a rate cut? will it look like you we? -- like qe? >> it was quite a punchy performance from the governor. i guess some of the comments made about him from people in the leave campaign -- i suspect they will start with a rate cut. they will leave more qe, more of these funding programs that

worked quite well in 2012 and 2011 -- they will keep that in store for perhaps around october and november if there are signs the u.k. is going into a deeper recession. i'm not sure economically what a 25-basis point cut in rates will have. given where the housing market is, it's expensive. it's coming off a high level. i'm not convinced a rate cut can bolster that. anna: he put up a defense of things he said running into the banks, notnd central just in the u.k., but around the world, have done a lot in terms of liquidity over the last few days. i want to show you a chart of how libor reacted. i can't. >> very well behaved. anna: is that a victory for central banking? >> it's a victory in some respects for central banking,

for banks who have planned around this event. it shows perhaps that some of the changes to the banking sector post-crisis have worked in that banking liquidity and the trust of banks and the trust of banks in each other is more stable than it has been. i think that is good. we wouldn't expect the banks to react in this fashion. when you look at u.k. banks, profitability is going to be an issue. anna: let me ask you about the ecb and how they will respond to the brexit crisis. they had a shortage of assets to buy, and now bloomberg had a story out late yesterday that suggested some governing council members are in favor of abandoning what is known as the capital t. buy in line with outstanding debt levels. i've got the chart that shows the italian-german 10-year spread. some people are suggesting, hang on the second, there will be some governing council who will want that.

how much do you think we are waiting for the ecb to move away from this t? >> i think we've got to be very careful. to some people's eyes, there's no crisis. the footsie is well above where it was this time last friday. banking liquidity is very stable. currency volatility is beginning to die down. to the extent central banks may want to stand back and let the , onet begins a clear itself some of the news brought on bloomberg last night, politically, this is quite dangerous for the ecb. it effectively means they are taking more risk. finland has to be very controversial. a lot of people think qe from the ecb is not stoking the european economy. it's not actually having an outright economic effect. anna: thank you very much.

michael o'sullivan stays with us. here are some highlights for your day ahead. an ecb executive member speaks of the french finance ministry at 8:15 u.k. time. what will he say about t? we have a slew of u.k. many veteran pmi. data for the eurozone as a whole at 9:00 a.m. at 10:00, we get eurozone unemployment, and at 11:00 u.k. time, michael gov sets out hise case for being the next u.k. prime minister. at 2:45 p.m. u.k. time, we get manufacturing data out of the united states. coming the radar today, up this morning, we will be talking to the newest fed president, james bullard. he will be with us on "surveillance" at 10:00 a.m. u.k. time. barclays briggs it did. blames the fall in the banks shares on fear. the interviews coming up next. this is bloomberg. ♪

anna: welcome back. this is "countdown." the time in london is 6:18. secure jeff daily says concerns about earnings have caused a significant dip in the bank's share price. speaking to erik schatzker in london, he says the bank's performance is weighing heavily on investors. the important thing is for barclays to be there for the public of great britain, to be there for our consumer clients, small business clients, with credit, advice, services. we thought a lot about the referendum, and it obviously went one way. that will have economic consequences. barclays is going into this ,rocess with its eyes wide open

its people very motivated and committed to the economy of the united kingdom. i take it erik: that the answer is yes, you can withstand the challenges? >> sure. erik: your leadership skills are going to be tested like never before, perhaps. are you ready? >> we will find out. we have spent 13 months getting ready for this referendum. we had the full executive committee meeting four times a day beginning thursday. day? four times a >> it was to make sure we knew what was happening in our branches, our call centers. on friday alone, we made 5100 loans to small businesses across the united kingdom. to know what is going on in the foreign exchange markets, we had three times the amount in our

systems compared to the regular day. think we are very prepared, and i feel terrific about how the bank handled itself. the other thing that is quite different from what we see -- we have seen in previous financial crises was the communication between the banks and the regulators. we were on the phone with the new york fed, etc. there's a recognition that come in order to avoid the next financial crisis, banks and regulars have to be collaborative, entering this referendum, that has shown its colors. anna: jeff daily talking about the situation room. somehow, brexit has been a blessing for u.k. mega-caps. the ftse 100 index loaded up with multinational commodity producers, drugmakers, and banks. more than that, mark carney's

reassurance that the bank of england will loosen policy sent the gauge to its highest level since august. michael o'sullivan is still with us. we picked me up on referring this to a crisis, suggesting there are many areas of the market where it feels like anything but a crisis. you say it's too early to load up on risk. is that right? where are you investing in the moment? >> we went into brexit being quite underweight equities. if you look at the fundamentals, growth, earnings growth. even in the u.s., the picture is not rosy. the rally we have had in the past couple years -- days has been quite odd come in that it has been driven by positioning, hopes that brexit won't happen. dashed asey will be we get through september.

for certain indices like the footsie, the big exporters are going to benefit. there are two phases of this crisis coming up. one is we are going to see the imprint of brexit on the macro data. we've got the u.s. isn. what is interesting, if you look at some of the high-frequency stuff, that shows a big drop in spending by people in the u.k. since the weekend. we can see the impact of deferred spending and investment. mark carney was adjusting we had posttraumatic stress from the .lobal financial crisis is that we are concern is, what consumers do, or how businesses invest. gdp isimprint on u.k. going to come from several avenues. bank lending may not be as easy as it was in recent months.

i think you would see a lot of deferred spending by companies. people have said a, when they look at i.t. budgets, etc., they are trying to advance with as little of that in place as possible. years tog to take 1-2 be absolutely sure as to what the new regulatory trade environment in the u.k. is. >> so many unknowns. what is the big issue for you for banks. is it the question around pass porting? terms of that sector and how interested you are in it, is that the biggest question? pass i can porting is a big issue. in terms of the trades themselves, you may see other european countries try to cherry

pick back to paris. it's a big story already. if you look at a place like dublin, there are limits in terms of the housing market. paris has its own problems. i don't think there's going to be a wholesale flight of human capital out of london. the margin of growth of the city is now capped for the next two years. >>lects i have heard some -- i have heard some bankers talking favorably of edinburgh besides from the weather. you been looking back at these big market events. what can we learn about how this one performed? >> one of the reasons we are still underweight equities and not taking risk right now, if you look at the asian crisis, lehman, you only get the realization of the magnitude

of this in the market about eight or nine trading days afterwards. if you look at performance and volatility. it comes in the week after the event that volatility begins to pick up, as people piece together the economic and political implications. this week, i think maybe people have only been looking at the good things that came from the referendum, the possibility a brexit doesn't happen, more qe from the central banks, and next week, reality will hit. >> we are not over the initial reaction really. >> i don't think so. i think there are other avenues. one that is going to be important is fx. had a massive bout of weakness. this may break the truce in currency wars. keep an eye on the chinese currency, because that is been weakening steadily. >> michael o'sullivan stays with us on the program. "countdown," too

close to call. australians had to the polls as prime minister turnbull pleads for continuity. we go to sydney next. this is bloomberg. ♪

anna: welcome back. this is "countdown." let's get the bloomberg first word news with rosalind chin. the bank of england has signaled a rate cut within months as it tries to shield the u.k. economy from the shocks of leaving the eu. governor mark carney says he won't hesitate to act to shore up the system and is considering what he termed a "poster measures." >> it seems plausible uncertainty could remain high for some time with the greater drag on activity than we previously projected. the fact will likely be enforced by tighter financial conditions.

massind: and massive -- a of data from japan shows bad luck for the world's third-largest economy. retail sales and household value stagnated. nceufacturers' confide steadied. the latest official figures show china's manufacturing sector treading water in june. the pml fell to 50, the dividing line between improvement and deterioration. as for the services sector come it continue to improve with the official guide -- gauge rising to 53.7. apple is said to be in exploratory talks to buy tidal. journal" sayset negotiations continue but a deal is by no means certain. tidal was launched in 2014 and was bought by jay-z for $56

million. apple recently revamped the subscription music service, and give itidal would access to exclusive streaming content from beyonce, rihanna, and others. hong kong is marking the anniversary of its return to chinese rule. the chief executive love the ceremony 19 years after the handover of power. it was his last flag-raising. his term ends next march. pro-democracy groups have pledged demonstrations today. global news 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. anna: thank you very much. asian stocks are on track for their best week since april as investors are betting that central banks will limit the fallout from the uk's referendum on eu membership. nejra cehic joins us. good morning.

nejra: we are seeing that risk appetite continue in equity markets. the msci pacific index, gaining for a fourth day out of five since brexit. if we look at the yen, we can see there is more of that move out of the safe haven. yes, it is gaining, snapping a three-day drop. household spending also declined. it's actually set for its sharpest weekly drop since may, the yen. it soared to its highest since november 2013 last week after the brexit vote, but it has paired half of that surge. checking on sterling, it's pretty much unchanged. comments, alluding to a potential rate cut. this currency has recovered somewhat after dropping to that 31-year post-brexit low.

interesting to look at the forecasts. only 30 out of 63 have changed their forecast for the year end. they say the currency will drop to $1.26 by the end of the year. the median forecast is for the pound to appreciate. we will see if that changes in the coming days. taking a look at oil, rising today after it had a 26% gain in the second quarter. that is the biggest quarterly gain since 2009. oil is set for a weekly rise, the first in three. anna: back to u.k. politics. be makingve is set to his case to be britain's prime minister later today. that is after he betrayed boris johnson who moved out of the race yesterday, saying he wasn't the man to lead the country. friends, you who have waited faithfully for the

punchline of this speech -- with myonsulted and advisers, i've concluded the person cannot be me. set his sights on home secretary theresa may, the early favorite, and three other candidates to head of the conservative party. michael o'sullivan is still with us. on how your thoughts this impacts politics. we get some early clues from the front runners in the campaign. >> i think there are several implications. i think it is likely that theresa may, given the way go has handled it so far, theresa may will be the next leader. they are both levers. i think people suspect she is a

leaver. maybe boris is, and it's the other way around. i think that means brexit is going to happen. she has said there will be no general election. anna: brexit means brexit, she said. >> a suspect by september, article 50 will be triggered, and negotiations will begin. -- seconde simple implication is for politics. we went into this referendum having project hate versus project fear. my sense is that politics have been devalued, and the tactics that have been employed very publicly here devalue it further. given that people talk about a gap between the electorate and delete, this can only further that. credibility is of as we go forward. anna: it will be interesting to see how domestically the policy-making changes, has to

change, or is changed as a result of stresses or strains put on the u.k. economy. theresa may has said there will be no general election. we could see unexpected moves from policymakers reacting to the negotiations in brussels or weakness in the economy they potentially don't have a mandate for. >> there's a whole game theoretic environment about growth. you can imagine teresa takes over in the context of a recession. her options would be quite limited. other than the negotiations themselves, they are going to be vastly complicated. britain has about 25 trade negotiators. it needs 500 for this process. countries have no interest in being nice to britain. then you've got all the other questions. scotland wants to remain a european country.

viewed from scotland, the starting gun has been fired on scottish independence. anna: i wanted to get your thoughts on how much closer together the rest of europe gets or further apart. cecelia maelstrom, giving an interview to a newspaper in sweden, talking about how she thinks they will be deepening euro country cooperation. is that how policymakers are going to read this yet go do they need to take ones that remain and put them closer together? >> i hope so. europe squared is really the best way forward. on some of the issues, there have been genuine issues raised in the brexit debate come immigration, the economic management of the eu, and these haven't been addressed by the eu leaders post-referendum. i think countries like germany and france want to know that the -- if thens

anglo-saxons are going to leave. i'm not sure it's a wise move for all the countries the eu. anna: thank you, michael sullivan. let's turn to politics on the other side of the world now. australia votes on saturday. the opinion polls are split on the middle between the ruling coalition and the opposition labor party. paul allen looks as the -- at the issues as the country prepares to make a choice. paul: the prime minister in a helicopter, the potential prime minister in a high visibility with and a treasurer football. it must be election season, no photo opportunity going on exploded. there is something different about australia's 2016 election campaign. with the country's deficit growing wider, this is about who can tighten the belt the most and create the least pain while doing it. that is the pitch of labor party

leader bill shorten, a key figure in the political depths of former prime minister gaylord -- gillard. he is promising to protect public services, even if it comes at a price. >> let's be clear. both sides of politics will be in deficit over the four years of the forward estimates. it is true that labor will not have the same degree of fiscal contraction as the liberals over this period. our plan rejects vicious cuts to health and education. labour's 10-year plan was once a presently mocked by the government. >> if derek zoolander were releasing an economic plan, this is what it would look like. >> a glossy brush full of unfunded promises. paul: when malcolm turnbull sees the prime minister's office last

september, he promised to explain to australians why tough economic decisions are needed to get the budget in balance. a key measure was a cut to the company tax rate come intended to promote jobs and growth. strong gdp and implement figures have helped the campaign, but polls show both parties in a dead heat. it's likely the turnbull government will be returned with a reduced majority and a divided senate. paul allen, bloomberg, sydney. anna: we go live to paul allen in sydney. the polls, i'm hesitant to read this question -- bookmakers or convinced the current administration will win. we have learned a few things about listening to bookmakers. give us your thoughts on the australian story. >> i understand your hesitation, but here are the reasons the

bookmakers say that. there are 150 seats in the lower house in australia, and the coalition government holds 90 of those. the opposition labor party holds 55. you can see the scale of the challenge for the labour party. they need to win 21 seats to regain the treasury benches. many analysts think that is a bridge too far. they are likely to do very well as the polls indicate, but can they claim 21 seats? it seems unlikely. as you say, voters have been making fools of the bookies and pollsters on your side of the world. anna: we will see if they fare any better. what has the prime minister been saying in his final appeals to voters? we heard him ridiculing the opposition. he has been using the brexit conversation as a bit of a warning. paul: yes, he has been challenging brexit as an example of what happens when you cast a

protest vote and get what you wish for. he is saying that voters should be wary of casting votes for independents or minor parties because of the likelihood australia could end up with a hung parliament. we have had a taste of that before in the recent past, between 2010 and 2013. julia gillard tried and succeeded to a large degree to govern the country with a minority government. malcolm turnbull says that that is a recipe for chaos and, in many cases, policy paralysis. he is urging people to think of the economy and vote for stability, and he says the only way to do that is to return his government with a comfortable majority. anna: thanks very much, paul. i have read much about buyers remorse in regards to the brexit vote. michael o'sullivan, credit suisse private banking, still with us. looking at australia, some of the stats around the economy don't look bad by european

standards, certainly by continental european standards. how does the economy factor into the selection for you? economyway, australia's is more driven by china, some of the issues there in the commodity sector. the housing market is very stretched in australia, and that's been a big issue in the debate. i would be interested in the result. i was in madrid in the early part of this week. the general election was the first test of how people responded electorally in a post-brexit world. there is a clear shift to the status quo. the socialists did a lot better than expected. people clearly did not take the risk of going with the unknown quality. you may see the same in australia. anna: this is an interesting test of whether the brexit vote has made people across the globe more risk-averse. i saw some pulling out of finland that suggested we've

seen a big drop in the percentage of fins looking for their own eu referendum vote in the wake of the brexit vote, and that is quite a lot of euro spec to susan -- euro skepticism. >> the big test will be in the states and trump. people readily associate donald trump with the kind of politicking we've seen in the u.k. in recent months. he is associated with brexit. he supports it. i wonder if we get to october, the u.k. is in recession, and americans will look at this and say, this is not working, or if it's working out, they will say, we also want to take our country back. i think in the u.s., this will play until the u.s. elections for sure. anna: interesting stuff. he was here this week, wasn't he? michael, thanks for spending time with us.

program, on the growing sentiment that abenomics isn't quite working as the latest data shows japan's economy is stuck in neutral. we're live in tokyo. this is bloomberg. ♪

."na: this is "countdown it looks as if the futures will be weaker at the start of the u.s. trading day, down by perhaps 1/10 of 1%. japan has released a slew of data, including the boj's tankan survey. data points to looming choices for bank of japan governor kuroda. j.d. schnider is in tokyo for us. good to have you on the program. today's japanese economic data was a bit of a mixed bag.

they are tending towards the negative side. tell us about it. j.d.: the cpi came out, and it showed overall consumer prices were down, as they have been the last few months, and even excluding fresh food, which is the bank of japan zone survey, they were also down 0.4% after having fallen in april and march. prices are where they were when governor kuroda started his unprecedented asset buying program, stimulus program, three years ago. they haven't budged. that is a concern to policymakers. the survey held. confidence remained about the same. results were almost all in before the brexit vote. and the further strengthening of the yen. one would have to think that they are not entirely reflective

of the mood right now, and so policymakers have quite a bit of concern about the state of the japanese economy. anna: some people have pointed to the survey and said come it didn't change much. out, perhaps it's rearview mirror, backward looking. what can we see in the data that helps us work out with the boj does next? economists are calling for the boj -- the calls are very loud for the boj to ease further when it meets on the 28th and 29th of this month. they are saying that because not the stuck in the mud state of the economy, but the yen is much higher than it was at the start of the year, and that gives exporters a lot of concern and basically a lot of the gains they had made with the weak yen

since the boj began its massive easing program, and it's really been reversed. there is a lot of concern about corporate profits going forward. anna: thanks so much for the update. joining us now on set, chris watley, the ceo of longview economics. we will talk all things u.k. and brexit in a little while. first, let's focus in on the japanese story. i read a nice line from one of my colleagues at bloomberg in japan who said, abenomics isn't dead, but it's a long way from vitality. >> that is quite a fair point. if you think about the currency. it's pretty much back to where we were before abenomics. we went all the way to 125, and now we are back at 102. of course, there's the third era. there were four arrows.

momentum seems to be lost. yeah, i don't think it is working. if you look at the economic data, it's pretty weak. exports globally are contracting. anna: we sell weakness in industrial output and exports in japan even before we saw this post-brexit vote surge in the yen. that doesn't bode well. >> it doesn't bode well at all. if you think about what drives the japanese economy, you are either looking for domestic consumption boom, which we don't have -- it is sort of stable to slightly up, but japan really relies on export growth. with the demographics contracting, it's not a strong domestic economy.a stronger yen doesn't help . anna: when i was speaking to michael o'sullivan from credit squeeze, he was talking about the return of currency wars. the japanese have been chomping at the bit to intervene a bit

more and do more but not wanting to upset the g7 and other bodies . does brexit give them the get out to get back in? >> the currency has moved another 5% to 6%. back in g7, which was last month, abe was talking about lehman-like moments. it was quite dramatic language, and the rest of the g7 didn't want to go with him. whether its currency wars or currency shuffling of the pack, i don't know. clearly, they need their turn at devaluing. anna: that is the big underlying problem. i've got a great graphic that shows the amount of consultation that the boj is doing with market participants and other players in the economy, and this is been increasing. meetings upon meetings upon meetings with participants in the market. what is your diagnosis for the japanese?

there is no one arrow that fixes this. >> that was an exciting third arrow, and he could have embraced it more. meetings don't really solve the problem, do they, unless you end up with some conclusion or action. any easyhink there is way out of japan. global growth is under pressure. anna: and the trade dynamic, under pressure. let's have a quick word about china. i've got the china manufacturing pmi. that's the white. you can see the white, this is the manufacturing. we've got 50, the divide between contraction and expansion, just dipping a little bit too exactly 50 in the most recent overnight reading. what to expect here? >> china has had a little bit of a bounce. they've done a lot of credit stimulus and old-school fiscal stimulus. if you look under the surface,

is reallye sector weak. profits are contracting. if you look at the shenzhen , profits are contracting 12%. investment spending is slowing. it's a lot of pressure. confidence is the lowest it has been. fades, i'm afraid the china data will deteriorate. anna: should the chinese be worried about the trade environment given brexit? >> they should. brexit is another piece of uncertainty. there has been no economic recovery until this one. it's not just trade. anna: chris watley, ceo and chief market strategist of longview economics. up next come is a cut coming? boe governor mark carney signals a move may be on the table. more on the brexit fallout.

we will look at how mark carney defended the things he said going into the referendum in the u.k. all of that to come as london wakes up. this is bloomberg. ♪

signaling stimulus, mark carney suggests action is on the way following the brexit devote. -- vote. will likely be required over the summer. it, the justice minister sets out his pitch to be the next prime minister this morning. then's economy shows in of lackluster month going even further away from the boj's target. is it running out of ammo? ♪ welcome to "countdown."

have a look at the futures opening up this hour. across the continent, euro stockls are expected to be up. the ftse 100 is up by around .7%, as is the cac in germany. let's bring up the risk radar. i should add into the mix what is going on with the pound. we have the dollar against the pound. we saw that moving around. brexit may prompt summer easing from the bank of england. that region from about what central banks would do. a half of a percent. .4%, moving quite well.

day, ofhaving a decent course. we have seen the most increase in silver in over a year. it set for the biggest decrease sense may, the japanese currency. quite phenomenal moving in the japanese currency. half of last week has been undone. -0.08.man 10 year is -0.25%.nese bond at we were talking about how the ecb might change its bond buying program. you can find that on the bloomberg if you are interested. that moves the spread between

the peripheral bonds in the later part of the trading day. let's get the first word news. anotherin japan says lackluster month for the world's third-largest economy. retail sales and housing stagnated. inflation fell from the year before. the survey was almost wrapped up by the time the brexit turmoil emerged. the latest shows china's manufacturing sector treading water in june. missingfell 250, estimates. the services sector continues to improve. jusitce secretary -- justice secretary will make his pitch to be the next prime minister.

boris johnson pulled out of the race yesterday. candidates are pushing to run the party. wall street journal says negotiations continue, but a deal is by no means certain. tidal was launched and then jay-z last year. it would give it access to exclusive streaming content. hong kong is mark and the anniversary of its return to chinese rule. this is 19 years after the handover of power. it was the last flag raising last month. some promised demonstrations today. they are unhappy about candidates to succeed him.

news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you, let's check in on the market action. haidi has the details for us. haidi: another bad way to what has been a tumultuous week. it is almost like the last week never happened. inare back to where we were most asian markets. it is not hard to see much of this rally is being underpinned by more expectations of global easing. we have coming out of the bank of japan today. inflationaryst pressures in japan still very much trending sideways. the central from bank and south korea today.

given that we had the weak china pmi chilling at best stabilization, it could do more in terms of adding liquidity to the market. we have this building up to be the best week since april. japanese stocks are seeing that best week since april. the yen has been holding fairly steady today. that hasn't been having t -- adding to exporters. giving back most of the gains by the end of the session. risk aversion as we go into election day. some uncertainty as to whether we get a labor or liberal wing out of that vote. elsewhere, we see shanghai up by .1%. i want to show you, given you earlier, we see

that go lower into negative territory. that is in terms of the shorter-term tenants. we look at -0.33%, a new record low. getting, if you can still call it a yield, again the ten year, another record low. currently turning negative. this policy continuing to play out in this part of the world as it has been in your part as well. anna: thank you very much. let's turn to the bank of england story. the bank of england has signaled a rate cut within months as it tries to shield the u.k. economy from the shock of leaving the eu. mark carney says he won't hesitate to act to sure up the situation.

the material flowing that the mps identified as a risk now looks likely to be our central forecast. plausible that uncertainty could remain elevated for some time. there is a greater drag on activity them with projected. be impacted byl financial conditions. monetary policy cannot immediately or fully offset the economic implications of the large negative shock. the future potential of this economy and its implications for jobs and real wages are not the gifts of monetary policy makers. these fundamentals will be driven by much bigger decisions, much bigger plans being formulated by others. continue to do is

relentlessly pursue monetary and financial stability. why doing so, we will facilitate the adjustments that are needed, consistent with those plans. the economic outlook has deteriorated. some monetary policy will likely be required over the summer. me,ould be irresponsible of or any of my other colleagues, to walk away from those obligations. those are obligations under statute. his session end of with journalists, he defended the warnings he had given in the lead up to the referendum. mark carney: what we said in terms of the risk to economic outlook and the risk to financial stability -- does anyone in this room not think those risks have begun to manifest? does anyone in the country think those risks have not begun to

manifest? anna: the chief market strategists for longview economics is still with us on the program. chris, what are your expectations around the bank of england? any may they do to shore up downside that emerge? clearly, they will be cutting interest rates. they will probably restart a qe program. i have to say, part of the weakness is their own undoing. when central bankers and governments warn about economic circumstances they create fear. see is manifested more we today. confidence is very important. they have undermined their own credibility. i thought it was bad to warn before hand. the bank of england is to -- it is your job to provide stability. not that things wil lbl be bad. anna: in his view, he thinks he

had to express the view of the mpc and other bodies that this was a big threat to the economy. it could trigger a recession. political.become the point is, the bank of england has to be seen as a situation.calm if it comes to pass, they can reassure markets that they are doing everything they can. rather than adding to the fear, which is essentially what all of the remain mp's and political people and institutional leaders did. we can see it now. you can see it in discussing people. there is a lot of fear around. the was brought on by conversations before hand. of thoseall

conversations that take place between the media and the financial community, you couldn't have a conversation i didn't include the banks expectations around brexit. chris: you talk about risk, of course. but the bank of england will do everything to offset them. that is your job. your job is not to wade into the political argument. economy will the nearly be as bad as some of the negative forecaster suggest. anna: you say you see a mild downturn. tell us about that. chris: we have at least one quarter of growth shock. probably quite a bad q3. flat or near negative. it may be a technical recession. i don't think we will dive aggressively as long as the central bank comes to the rescue and puts stimulus into the system. economy is primarily based

on confidence and house prices. if you put in liquidity, you hold that up. let's not forget, the relationship of europe hasn't actually change. it won't change for two years. there will be hits to investment, of course. it is not as bad as people paint. as long as the central bank does what it says it will do, the economy doesn't need to be in a deep recession. anna: do you think it will retain confidence, in terms of market transaction? they had not scared to do beforehand it will be easier to retain that confidence. you would have more credibility as a central bank. i think they can do it. it is amazing what happens when you print the money. confidence comes back. i think, on top of that, we need to see a process in the conservative party getting towards a new leader.

bit to modulus but we seem to be doing that. we need a new leader that makes business friendly statement. that is really important. anna: we will return to that in just a moment. you have some thoughts on the mastic policy as things have changed recently. ,ome breaking news from takata the airbag maker in japan. cuts.ill make -- take pay other executives will take 20% monthly pay cuts over the next year. continuing news around the scandal that hit this business around airbags. italian 10 year yields dropping to 1.49%. the spanish 10 year bonds advancing.

barclaysn the program, -- they say the u.k. vote is affecting shares. this coming up next. ♪

back, az london this morning. the future suggesting we could be stronger around 1% stronger at the start of the trading day. let's get the bloomberg business flash. been ordered to pay $3 billion to hp after they found that the company violated a contract to support software for hewlett-packard's once promising chip. jurors reached unanimous verdict concluding that oracle's

decision to bail out of the agreement hurt hp's revenue. oracle said it will appeal the verdict. they value the business at $3.5 billion, that is according to a person familiar with the matter. the agreement underscores the importance of the video streaming business of the future beensney's espn, which has losing viewers and advertising dollars to online media. hershey's board has rejected a bid. it would have created the biggest candy maker in the world. what surprised some was that hershey offered no rationale for rebuffing the offer saying all in that warranted further discussion. that is your bloomberg business flash. anna: thank you very much. barclays ceo says concerns about aarnings have caused

significant dip in the share prices. speaking to bloomberg's eric in london he says the bank's weighing more heavily on investors than any thoughts of capital or liquidity. >> the important thing is for barclays to be there for the public of great britain, and our consumer clients, small business, and corporate clients. so we have thought a lot about this referendum. it went one way that will have economic consequences for the barclays is going into this process with eyes wide open. are very motivated to the economy of the united kingdom. >> i take it the answer is yes, you can withstand the challenges ahead of you. >> for sure. >> your leadership skills will be tested like never before. are you ready? [laughter] >> we will find out. we have spent 13 months getting

ready for this referendum vote. we created room which invoked last week. we had the full executive committee meeting four times a day beginning on thursday. and through the early part of this week. it was to make sure we knew what was going on in our branches and call centers. ns toiday, we made 1500 loa small businesses across the united kingdom. to know what was going on on the foreign exchange market. we had three times in the first couple of hours foreign-exchange through our systems. to know what our corporate asking.-- clients are i feel terrific about how the bank handled itself. the other thing that is quite different from other crisis is

the coordination between the large banks and regulators. we were on the phone actively with the bank of england and the fsa, the new york fed, etc.. there is a recognition that to avoid the next financial crisis banks and regulators have to be collaborative. that has shown its colors. jonathan: somehow anna: somehow, brexit has been a blessing for mega cams. they loaded up with national commodity producers. ve recovered after the post brexit tumble. mark carney's reassurance that the bank of england will be levels.t it to high 100 isrise that the ftse better protected from domestic turmoil. it hasn't been a domestic measure for a very long time. chris: the numbers for 60% of

earnings are from overseas. if the currency goes down initially, you revalue the market upward in the end. all, bigsurprised at international businesses. anna: tell me more about your thoughts around the brexit scenario. debate rests on whether the u.k. can continue to fund its current account deficit. this is something that mark carney and others pointed to as a concern. why does that matter for the housing market? retainreally, we have to confidence. if you don't retain confidence, and start getting capital outflows, you get into the credit crunch. that scenario undermines the economy and banks type up -- tighten up.

we heard that from mark carney. theother is what conservative party does once they have a new leader. making everything business friendly, open for business. one of the things they should do is get rid of corporation tax. it doesn't actually collect that many taxes. about 3% of gdp, it would immediately counter all the negatives from leaving the eu. it would make us and even march active place to do business. you have to add to that that big companies pay -- small companies pay lots of it. they create most of the jobs and the economy. by getting rid of it it would be a masterstroke. we live in a world where corporation tax doesn't work. anna: we had conversations about this previously. this big shift we are seeing could prompt some out of the box

thinking. more broadly, a lot depends on the go she and with europe. but also depends on the foreign policies they choose to enact. can it be that radical without an election? they say there will be no general elections. do they have a mandate to be that radical domestically? the majority, so i don't see why not. i think it will be terrific. bold statement. let's not forget, they have been reducing corporation taxes. 19are on target to be at quite soon. maybe the survey going to 10, or would like to go to 5. it is a wonderful thing. britain ranks fourth highest in the ease of doing business. tax: it already has low compared to other countries. chris: it could go so much lower. there are positive things that

could be done. this brings it desperate and is a wonderfuln is place to do business. anna: we haven't left yet. chris: av we won't even leave. -- maybe we won't even leave. anna: we will see. we will be trading around this. what is your expectation? chris: the tories are clearly in charge here. they must be of the same mind given how they campaign. i think democracy has spoken. we just have to move on. anna: we will hear from them later on. chris, thank you very much for joining us on the program. we will see if anyone at the treasury is missing you. that will do it for us, "on the move." that is up next.

the asian equity session was pretty positive. they're keeping up that battle and running with it. i have to say those futures don't quite follow. for countdown. ♪ get ready for the rio olympic games

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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. ♪ , welcome, you are watching "on the move." we are counting you down to the european open. here is what we are watching today. bank of england governor implies he will do whatever necessary to keep the british economy intact. the minister was set out his pitch to become the next prime minister. is a brexit now a done deal regardless? japan's economy is stuck in neutral. will he abandoned his inflation target?