to tender his resignation as prime minister of u.k.. the successor theresa may is expected to deliver her first speech at 10 downing street in the next hour. it is 5:00 p.m. in london. you are watching bloomberg markets. shery: good afternoon. scarlet: we are all over the big story today. theresa may is set to become the next prime minister. i want to bring in ryan chilcote who is in london, as well as john nichols waits. david cameron has just wrapped up in the last hour his final speech as prime minister of the united kingdom. give us a wrap of what he said. a lot of people are commenting that he -- it was a very

emotional farewell address. ryan: it was a 10 minute speech. he came out with his wife samantha and three children. and he said that -- you know, he took some time to talk about how he has improved the economy and remember, when he came into office in 2010, there was still a lot to do in terms of repairing the economy after the financial crisis. he thanked the country so much service and graciously -- the country's civil servants and graciously welcomed recent may -- theresa may. there wasn't a lot of policy in the speech. and it must've been a painful one. he is 49 years old, just short of his 50th birthday. as such he is the youngest prime minister to give up power in this country in 112 years. so he came out and did what is the convention with his family

appeared in front of hundreds of cameras and members of the press and said his part and headed to buckingham palace to make way for theresa may. shery: let's delve in a little bit into cameron's achievements. he has two referendums under his belt. what is your take on what he has done in his tenure? john: he is one of those people where one thing will dominate his legacy and that will be brexit. he won one and a half of jet -- elections. you have to look at a country which was incredibly reliant on finances as a starting point. and he did something to make the tories, at least for the most part, seem a much more softer party. he was a champion of things like gay rights and stuff like that and he was a much more margin

metrosexual, tori, if you can use that phrase, that people have seen before aaron so the irony of cameron is that he is looking at a very successful politician until very recently until one thing gotten the way area one of them is that he was a lucky general freight very long time and then his luck ran out. shery: so where does he go from here? john: my suspicion is that he will stay in parliament for a while and -- he is a pragmatic figure. he worked in the private sector before. he can do many things. politics was always his left. scarlet: ryan, let's bring you in here. david cameron is saying goodbye to the public let's talk a little bit about theresa may. 59 years old, a swift uncontested surprising ride to the head of the conservative party less than three weeks

after the brexit vote. she's got a lot on her plate. what can we expect to hear from her when she does address the public later this hour? and what will she be working on later in the week? ryan: i think it is going to be a matter of fact speech from her. she is going to say she's going to get down to work. i would imagine it's going to be too filled with policy. she has made it clear that she intends to lead this country out of the european union as the british public voted for in the referendum. interestingly as you know, she was a supporter of remain, maybe a reluctance of her, but at the end of the day, she felt it was the best for the u.k. to remain in the european union. now that she is leader of the conservative party and in a few minutes time, the country's new prime minister, she says her new role as do what the people have asked for. she said brexit is brexit. she has put together a team.

that will happen almost immediately. this evening, we will learn some of the key appointments. there will be a brexit czar. we might learn who the next chancellor of the exchequer will be. philip hammond is the front runner for that job. some british broadcasters have said that he has already secure the position. we will have to see. i think she's going to get on with it. she has promised her's questions coming up. and she is going to have to lead what is a very divided country. while the u.k. did vote to leave the european union, 48% of the people that voted did not want that to happen. so she's going to have to unite country and very quickly formulate what kind of position britain should have come a relationship britain should have

with the european union in the future. that is very complex because she does not want to box itself into anything because she will lead the negotiations with the european union in that direction. scarlet: that is something that she has made clear. she is not rushing towards it either.she's looking to trigger or put into action article 50 maybe in 2017. to that end, what kind of alliances will she need to build, say, with angela merkel? ryan: angela merkel full -- angela merkel is the most powerful leader in the european union and angela merkel -- it will be absolutely essential to win her support and develop air -- a rapport with angela merkel, chancellor of germany. she will need to reject other people as well. juncker, the president of the european council the french president, the italian prime minister. at the end of the day as you

said, she has already indicated she will only invoke article 50 -- britain's formal notification that they will leave the european union, next year. because when she does that, the u.k. has only two years to negotiate their exit and the relationship they will have in the future. so she will need to have conversations with all caps leaders to get the kind of deal that she wants to trigger article 50. shery: theresa may is known as her tough stance when she was legal secretary. what is her stance on illegal citizens in the u.k.? john: for some people, we are declaring amnesty. but all the existing ones can stay. she has held back from that event. she sees that as a bargaining chip. there is a large number of

britons also living in europe. so there are both sides that have an interest in some kind of deal over the listing supply of people. but she is a negotiator. will made -- may fits into the pattern or she can negotiate. she is someone who has always been there in the background of the tory party. and there is -- she was always behind osborne and johnson and these are the figures. and now she's got it. scarlet: i just want to jump in here with some headlines. belgium's for mayor has been commenting on theresa may as the next u.k. leader. he's making comments saying that he is urging theresa may to trigger brexit talks, to invoke

article 50 "quickly." and he wants the u.k. to be a partner with belgium and the eu. they want as much access as possible to the eu single market. but at the same time, as john and shery were talking about limit eu citizens access to living in the u.k.. you cannot have one without the other. ryan: with regard to the comments from the belgian prime minister, clearly, he wants to be the first to congratulate her. maybe he is a little ahead of things. when you hear comments like that, calling on the british prime minister to invoke article 50 i've spent most of the last three weeks in brussels. i think it is a bit of a red herring. at the end of the day, they understand that it is down to

britain to invoke article 50. they know she is not going to do it until next year. they were told as much as much in brussels yesterday. i heard from several different sources. britain had a representative there. she has this very fine balancing act. in terms of the economy, in terms of the city of london, the financial district she wants to maintain access to that single market. but the eu rules, as they stand right now, means, if she wants access to the single market, she has to accept freedom of movement, freedom of labor accept eu law and the u.k. would have to pay into the european union's coffers. so there are a lot of people who say, well, that is not what i voted for. i want to control migration. i don't want all of these people to come in. yes, i want the single market. she is going to have to find a middle ground way to charm angela merkel, all the other eu leaders, importantly the german chancellor, so she can get some

kind of deal. she doesn't have very much time to do that. when the clock starts ticking, she only has two years to do it. these things can take years and years. scarlet: certainly a lot in on her to do list. ryan chilcote, thank you, outside 10 downing street. let's give you a quick check on how european assets fared on this historic day. we saw the british pound give up its earlier gains. cable the pound dollar rate, now falling to 1.3183. the ftse as well took a leg lowered toward the end of trading. down by .2%. european stocks traded marginally, less than a point. and the euro is stronger at 1.11. so we will continue looking at the u.s. markets. a historic day for the u.k. were david cameron, the uk prime minister, arrived at buckingham

palace a few minutes ago, where he will be meeting with queen elizabeth to offer his resignation. coming up next, what will brexit mean for europe's banking sector? we will talk with a bundesbank board member. ♪

scarlet: here are watching bloomberg markets. we have an exclusive with you -- it's closer for you. caroline hyde's live in frankfurt where the top european banking mines are gathering to attempt to answer questions.

caroline: thank you very much. indeed, joined by none other than dr. dombret. thank you for joining us today. give us a sense about the future banking. will frankfurt went out? dr. dombret: not even sure because the negotiations have not started out. what we should be doing is prejudging what it means. i also don't think it would be a good thing for us to educate the united kingdom. so we just wait and see and we observe. we have nothing against the british banking system and london as a financial center. we have worked with it for such a long time. should there be relocations, we will see. but at the moment, we are relaxed. carolyn: the trading, the

clearing of euro denominated assets, is that something that will continue? dr. dombret: it depends on the size of it aired. right now, there is a big position being cleared in london. this was always a bit of a problem. but as long as this was in the european union, this was not too much of an issue very i think it would take a big tolerance of supervisors to see this continue once the united kingdom has left the european union. i think there must be changes in this regard. caroline: so likely to see that. what about the clearing houses themselves? we are going to be seeing it passing judgment soon. should that go progress across borders? dr. dombret: i'm neutral on any

announced mergers. i think the u.k. leaving the european union makes the economic rationale of such a combination as bizarre as it may be, even higher. and it strengthens the economic question now. we need bridges in the future between the united kingdom and the european union. and the more bridges we have in an economic sense, the better. so i'm not passing on any judgment or taking any advice. from a german perspective, the corporate governance right now is not one where everybody in germany would be a really happy. and it must be reevaluated now given that the brexit decision occurred on june 23, june 24. the good thing in this merger between the london stock

exchange and deutsche burda is that, before the brexit vote the installation of a referendum committee, which now has to take its time and dig through how they want to react to it and we won't give any advice. but interesting enough, the economic rationale has increased rather than decreased through a brexit vote. caroline: what about the stability of the banking system in general? there have been on for seeing consequences thrown in told though light, some instability and structural -- dr. dombret: first of all, i would like to stress how well the markets work. the financial markets work very well. every trade traded, every trade settled. we had volume eight to 10 times beyond what we normally had. the circuit breakers where they

were enacted worked. i'm very happy with how the financial markets worked. this is a function of two things. a, the banks having to sleep prepared for this, a very professional bank of england before and after the referendum. there are structural issues in the eurozone banking arena and banking landscape. they haven't changed that much. i don't think we could seriously take brexit as an excuse now to come on let's say, delay or postpone or whatever other words you might want to choose reforms. so we have to continue work on those structural issues. and we will do that. i think brexit has little to do with this. caroline: but if they have been thrown into the light, should they use a bail in for italy's

banks rather than a bailout? dr. dombret: i am not going to cast any question on whether or not a bail in is necessary right now. that would mean that italian banks would go beyond -- below, i should say, below their capital requirements. i am not going to comment on that and i don't see that right now. i don't see where there is a bail in requirement at this very moment. caroline: and how about banking business models as they stand. will they need to change post brexit? dr. dombret: there are some business metals that are in need of change, given a very low interest rate environment, given the threat of digitalization how much you have already prepared for that, and also given quite some higher regulation. but the real change will come after the brexit vote for those banks who have used the u.k. for past porting and who may no longer do that.

so there will be changes. but we have all the time in the world to really think this through. caroline: all the time in the world? dr. dombret: all the time of the world to do it the next two years. but we have to take time. you don't take -- you don't shift premises just like that. you have to take the time and do that. and we have quite some negotiation time ahead of us. and there is no rush to do anything right now. caroline: andreas dombret wonderful to have you. he feels there is all the time in the world without switching to fast before banks relocate. scarlet: thank you so much. as we mentioned, a historic day here in the united kingdom. coming up, david cameron meeting with the queen right now. we will continue to follow the headlines. we know that he will be speaking

with the queen about 15 minutes with the conversation, where he will tender his resignation and he will recommend theresa may as his successor an entry summit will make her way to buckingham palace, where she will be confirmed as the 54th prime minister of the united kingdom. this is bloomberg. ♪

shery: this is bloomberg markets. a historic day in london as david cameron steps down as prime minister and theresa may is about to be named his successor. scarlet, you are there. what has the mid-been like? scarlet: so many things moved quickly and without precedent over the last three weeks. inside of three weeks following the exit of though. but today, things feel like they

have slowed down a little bit. there's a lot of pomp and circumstance, a lot of formality as david cameron renders his resignation to the queen and theresa may makes her way to buckingham palace, to be invited by the queen to form a new government. i want to know why the queen's involved in this way. as you know it is a constitutional monarchy. the queen is the head of state and she has two officially confirm the prime minister. shery: i love that they have thisshery: customary transition of kissing of hands, although no kissing takes place. queen elizabeth just asked theresa may to form a new government. we are looking at live pictures of theresa may arriving at buckingham palace to meet with the queen, the customary process of kissing hands. and then the queen asking her to form a government. of course, this is cap being three weeks of political and economic turmoil after she meets with the queen for about 20

minutes, she will head down to 10 downing street as the new prime minister. scarlet: in queen elizabeth's reign, she has had 12 prime minister's, starting with winston churchill. he was the first one. david cameron was number 12. theresa may soon will be number 13. we will see theresa may make your way to the prime minister's home and office, 10 downing street, where she will then speak to the public and give some words of assurance to everyone, investors alike, as well about her agenda and what she plans do. the first thing is to get to work and appoint her cabinet. this is bloomberg. ♪

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call or go online today to switch to x1. scarlet: we continue our coverage of the historic transfer of power in england. theresa may has just arrived in

buckingham palace. she is meeting with you and elizabeth ii who will confirm her as the third teen's prime minister of england. theresa may we'll head straight to 10 downing street, her office, her home, where she is expected to deliver her first speech in her new role. you are watching bloomberg markets. shery: what a day, scarlet. good afternoon. scarlet: let's get the latest from ryan chilcott and simon kennedy. simon, let me start with you. we know that theresa may has been in the background, coming up with the names that she wants to put forth as her team, as her cabinet. but she cannot make any announcements just yet. how quickly can we hear some names? simon: i think we will see some

of those names tonight. the names will start to trickle out in the next few hours. scarlet: certainly they are key positions. ryan, you are outside of 10 downing street. david cameron gave his last speech is premised are. it was very emotional, wasn't it? ryan: it was. keep mind that's given mine, he has been prime minister for six years. it was not an easy six years. we had to clean up a lot of the mess of the financial crisis he led the country in two huge referendums, three, action but two big ones. thankfully for him, scotland elected not to leave here to but the other referendum is the european union. he campaigned for the u.k. to remain in the eu and he lost.

he lost his job. that makes him the youngest prime minister to lose power in this country in 112 years. so very emotional. he appeared flanked by his wife samantha and three children. they are not in the public eye very often. it was touching with his boy wearing his high tops, seeming sheepish in front of the cameras. but it is a huge transition for the prime minister or the former prime minister, i should say. he will become a act venture. he still has a mandate to be in the parliament until 2020 representing his constituency. but he will not be in a government. he will allow theresa may to continue to call the shots in this country from now on. shery: the royal family tweeting that david cameron had not is with the queen and tendering his resignation the next question is

all about what happens with theresa may. next week on july 20, she stands for her first prime minister's questions. what are we expecting to see until then and what are we expecting out of that session? simon: bermuda job is to form a government. she thought she had -- her immediate job is to form a government. she thought she had two months to do that. she will build a government and start talking about brexit again. right now, she has the chains of awesomeness -- chains of office, so to speak. she was a supporter to stay. she is going to try and look to start that conversation with her european counterparts over when

and how to enact to the article 50, which starts negotiations formally. clearly, she will try and have some sense of what lies in store your part of that is in her saying she will wait to invoke article 50 until next year. the most ducting challenge of any premier for many decades. scarlet: certainly, she's got a lot to tackle. what about those who were so vocal about grexit, didn't -- about brexit. didn't nigel retire last week? simon: boris johnson, michael gove big members of the party. it was pretty much a 50/50 split over this. she will perhaps put some brexiteers in the cabinet.

one who's guaranteed is the key role of negotiating with the european union on divorce talks. there will be a pro brexit minister there. somewhere in the cabinet perhaps johnson, will get a position. shery: what do you see coming out of talks? simon: nicola sturgeon has been quite clear. scotland voted overwhelmingly to stay in the european union in the days following saying that for scotland, it should be a member of the eu. she ultimately cap the u.k. together. but nicola sturgeon probably

seeing a reason to revisit that and one of the legacies of the referendum by david cameron is that we could see again a talk about whether scotland should be independent. scarlet: thank you so much for that. let's start with the headlines. mark crumpton has more from the newsroom. mark: president obama meets with law enforcement, mayors, academics and civil rights activist to address the problem of police violence. the funerals for three of the officers will be held today. the other two officers will be laid to rest on friday and saturday. on the first anniversary of the nuclear agreement with iran, republicans in congress want to derail the deal. the house is scheduled to vote this week on three proposals that would impose sanctions on

iran. last year, iran agreed to curtail its nuclear program in exchange for the easing of economic sanctions area congress hasn't been able to agree on funding for the zika virus. that is likely to delay government research into a vaccine. lawmakers are preparing to start their seven-week vacation. democrats blocked those he got a bill because it also denies money for planned parenthood. a new study finds 34% of americans paid no income tax. it is because of low incomes or refundable tax credits. scarlet: thank you so much.

politics and the formality of protocol, the transition of power jumping market action. you can see the pound racing -- erasing gains from earlier. the tension has really turned it to tomorrow's boe headlines and the prospect of a rate how -- rate hike. the euro meantime getting a little bit of a lift rising .4% to 1.11. this is bloomberg. ♪

shery: this is bloomberg markets.

let's get a quick check on u.s. stocks. they are feeling the downward pressure. the dow jones and s&p 500 reversing three days of gains. the nasdaq also reversing four days of gains and falling eight order 1%. let's get more on those tech movers with abigail doolittle, live from the nasdaq what are you seeing? abigail: we are seeing some fluctuation. it appears behind this weakness is the flipping of some of the big tech stocks. amazon, facebook and apple taking down what could be behind the weekend -- though weakness

-- the biggest worry for the nasdaq is a macro question. after the big five-day rally that left of the nasdaq slightly higher, right now at least, still above the big row number of 5000. that unlike the dow and the s&p 500, the nasdaq is nowhere close to its record highs. so is this rally over the last two weeks for real? when we take a look at a longer-term chart of the nasdaq, there is one thing we know. lots of uncertainty. massive swings up and down. interestingly with the nasdaq climbing over the last five days, we have the index exactly where it has been twice last year, right around the top of a range. but that led to the nasdaq dropping back down suggesting we could see the same, these lower highs lower lows. the tension we are seeing with the growth year nasdaq lagging

the more mature s&p. shery: thank you. scarlet: let's stick with u.s. markets. equities just off their all-time highs. where exactly do investors go from here? let's bring in greg sterling. he oversees over $3 billion. he joins us from his office in boston. abigail is just posing the question -- is this risk on post right's it rally for real? craig: we think the movement we see in the market, year to date or even since february, has been justified. we have seen an incredible decline of the cost of capital for companies that has happened in a very short period of time. that alone can drive equity valuations. that said, going forward, we think there is not much room for error. the cost of capital is driven by

the treasury rate, the treasury bill the treasury yield, and that doesn't look like much lower.

we have some very large companies that are secular winners. we are heading into the outlook for the rest of the year and we think those companies will continue to do well and ultimately, it will come down to fundamentals and valuation area i think there is a lot of secular winners, particularly within mega cap tech which has lagged a little bit. scarlet: we've got some breaking news. according to the bbc, theresa may has been formally named the uk prime minister, the 13th under queen elizabeth ii's reign. craig stirling meantime, joins us from boston. jpmorgan kicks off earnings season this thursday, tomorrow.

the fed has made clear it is on hold. is this priced into bank prices? craig: bank stocks look washed out. they are very cheap. it has been that way for a while. it is one area of the market that has participated -- has not participated at all in the rally. it seems like most of that is priced in. how much worse can things get? it would be nice for banks if they had a yield curve or better capital markets activity. there is a lot of m&a concerns coming out of europe and brexit would impact tanks sooner more than other companies. it would be good to see things getting a little bit less worse or incrementally that would be good to see. shery: what do you expect to provide positive upside for earnings? we are now expecting an earnings

recession, a fifth quarter of earnings declines for the u.s. craig: i think you have a bifurcated market. anything they generally touches what is called the commodity industrial complex energy materials, many industrials, but not all. they are going to have a tough quarter. nothing is getting much better. it will be harder for the management of those companies to give you much in the way of a positive outlook, given all the macro uncertainty. europe had been the one area that had been a sign of strength and that seems to be uncertain right now. that said, there are companies, many companies out there that are tied to the u.s. consumer the domestic economy here and that has been doing quite well. while overall, it might not look great, there are absolutely pockets tied to the domestic economy that we think look very promising, in addition to the growth of secular tech that we

think can continue to do well. shery: thank you so much for joining us. scarlet: here in london, we are taking a look at -- this is a live shot of buckingham palace. theresa may will be getting into this car when she is done with her meeting with queen elizabeth ii. she will then go to 10 downing street where she will at least be to the public and make a first address as the prime minister of great britain. her swift and uncontested rise in the conservative party she is the daughter of a clergyman. she entered the party in 1997 previously worked 20 years in finance coming putting the bank of england. she will need all of that experience as she tries to manage the uk's met -- the uk's transition outside of the european union. this is bloomberg.

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scarlet: i'm scarlet fu in london. you're looking at live shots of buckingham palace. this is the car that awaits theresa may, the uk prime minister. she has just been confirmed by queen elizabeth according to bbc. she should be making her way out with the queen and making her way to 10 downing street, the home and office of the uk prime minister. at that point, she can get to work. we want to bring in ryan chilcote who is right outside 10 downing street. david cameron has stepped down. he has left 10 downing street. we know theresa may is getting ready to come in. as home secretary, theresa may had a portfolio that was very much tied to the issues surrounding brexit. she oversaw immigration. she oversaw the police force. ryan: that's right.

it is the immigration issue that many would say that was what one the day -- won the day my where voters want to see caps on immigration. they felt the leeway to do that was for the u.k. to exit the european union. of course, one of the main tenets of the european union is you have to agree to free movement of labor, free movement of people from within the european union. and a lot of people in this country felt, and theresa may was one of them, that that needs to be controlled. that there was too much, too many people coming into the country. even though she herself campaign for the u.k. to remain in the european union, she says that now that the british public has spoken and wants to exit, brexit is brexit and that is what is going to happen. but she knows the finer points

of immigrations. and you can expect her and her negotiations to work that issue, to find to -- to work to find a way to where the u.k. can still have access to the markets and still have some limits on immigration. if you want access to the single market, you have to let people come from within the european union union as they choose. shery: jean-claude juncker saying that europe and the u.k. must address the brexit situation "very soon." what are we expecting at a theresa may? what she says so far is triggering article 50 she will have to wait until at least 2017. what are we expecting on that front? ryan: that's right. she wants to take her time. when she triggers that article

50, which is effectively the u.k. formally notifying the u.k. -- the european union that it intends to exit, that kicks off a two-year process. and she has to conclude those negotiations in just two years. many people think that job could take several years. so she is going to want to use her time before she invokes article 50 to try and have some kind of preliminary chats with the other eu leaders as to what they are prepared to accept where the sort of red lines will be in the negotiations. and she is going to need to build your team. because this is the negotiation trade negotiation, security negotiation that involves hundreds and hundreds of april. it is extremely complex. that is her first task. she will come down here to 10 downing and do monday and things, like move in. then she has to -- and do monday and things like moving. and then she has to build her team.

she is going to be very busy and she did not have very much time to prepare. she woke up on monday thinking she has a lead in the leadership contest. that will take until september. she thought she had two months to get ready to being prime minister. in fact, she had two days. scarlet: the timeline has surprised so many people. how much of a mandate that she really have? she became prime minister without going through an election of her party. she was selected by her peers and the queen has confirmed her but there was no election. ryan: that is not an entirely strange or unusual thing to happen in the united kingdom. because the conservatives already had that mandate. she, as the new leader of the conservative party, now with the blessing of the queen, can continue to lead the country as prime minister without the

general election. but there are a lot of people who say, if she does want to invoke article 50, she may want to or need to have a general election, just to get that mandate from the people themselves ahead of 2020. but she has been very clear she sees no need for that uncertainty that they are rated by an election before that time comes. scarlet: this has certainly been a surprising process all throughout. it is hard to say other are not that will be the case. thank you so much. of course, we are awaiting the new prime minister of the u.k. theresa may, to come out of buckingham palace. this is bloomberg. ♪

scarlet: these are live shots of theresa may coming out of buckingham palace. she just had her meeting with the queen. she was confirmed as the new prime minister of the united kingdom, the 13th under queen

elizabeth ii's reign. she is now on her way to 10 downing street. it is a 10 minute drive. it is the home/office of the uk prime minister, as it has been for much of the 18th and 19th century. certainly since 1905. we will continue to monitor her movements. we know she is likely to come out and give some kind of commentary make some kind of comments about what she is going to do next. in the past, she has conceded that she is not a show a politician. she says i just get on with the job in front of me. let's check in now with ryan chilcote who is on the scene at 10 downing street. we see the cars making their way towards 10 downing street. obviously, they have a clear road ahead of them. this is a lot a formality, a lot upon bester -- pomp and circumstance. we knew theresa may would be

appointed the next prime minister. there was no surprise here. ryan: no, no surprise. and the atmosphere here is electric. clearly, she will be arriving any moment. it is just a few minutes drive. she doesn't have to wait in traffic. she is in a motorcade. she has been effectively sworn in, if you will, by the queen. we do expect her, only the second woman in british history to hold -- only the second woman in british history to hold the position of prime mister, to pull up your. she might go inside and compose yourself. but i think, since it is 6:00 in the evening here in the u.k. all the newscast have become -- have begun. she will rightly go up to the lectern. she sees it as her job right now to step into this power vacuum

that we have had in the u.k. since june 23, since we got the announcement from david cameron that he would step down, because he lost the referendum and he did not want the u.k. to exit the european union. here we go, we are going to get this done. brexit is brexit, that is something that she has said many times. remember, a pretty divided country. 52% of the british public voted for the u.k. exit from the european union. where all parties get what they want, and i will be very tricky. she's got a lot to do, and we will be waiting for her to make those first comments when she gets here. >> you're just seeing her getting to your position right now. will we see anything substantial out of what she's going to say or is it just a formality? >> it is a formality, but i

think the tone is very important . she's going to try to be inclusive, going to try to give direction to what she wants to achieve. she is prime minister now. it's different when she's actually in the job from what she said over the last couple of days, literally, but she's no she's going to have it. perhaps the most substantive thing comes from when we're going to learn who's going to be in her team. she's coming in right now. you can hear this huge crowd outside of 10 downing. they just directed in supplies, some people -- erupted in

applause some people booing. she's 59 years old, this country's second woman to be in the job. margaret thatcher was the first. margaret thatcher 1/4 century ago stepping down. huge excitement here. you can see her stepping out alongside her husband, a banker here in london. this must be quite the moment for her. just two days ago she did not even know she would be prime minister today. she thought she would have to wait until september, when the conservative party announced its leader and here she is. let's listen in. >> -- where her majesty the queen has asked me to form a new government, and i accepted. in david cameron, i follow in

the footsteps of a great modern prime minister. under david's leadership, the government stabilize the economy and helped more people into work than ever before. but david posture legacy is not about the economy, but about social justice. from the introduction of same-sex marriage to taking people on low wages out of income tax altogether david cameron has led a one nation governments, and it is in that spirit that i also plan to lead great because not everybody knows this, but the title of my party is the conservative and unionist party, and that word unionist is very important to me. it means we believe in the union. the precious bond between england, scotland, wales, and northern ireland. but it means something else

which is just as important. it means we believe in a union not just between the nations of the united kingdom, but between all of our citizens. everyone of us, whoever we are and where ever we are from. that means fighting against the burning injustice that if you are born poor, you will die on average nine years earlier than others. if you are black you are treated more harshly by the criminal justice system that if you are white. if you are a white working-class boy, you are less likely than anybody else in britain to go to university. if you go to a state school, you are less likely to reach the state professions than if you are educated privately. if you are a woman, you will earn less than a man. if you suffer from mental health problems, there's not enough help to hand. if you are young, you will find it harder than ever before to find your own home. the mission to make britain a

country that works for everyone means more than fighting these injustices. if you are from an ordinary working-class family, life is much harder than many people in westminster realizes. you have a job, but you don't always have job security. you have your own home, but you worry about paying the mortgage. you can just about managed but you worry about the cost of living and getting your kids into your -- into a at school. if you are one of those families, if you are just managing, i want to address you directly. i know you are working around the clock. i know you are doing your best. i know that sometimes life can be a struggle. the government i lead will be driven not by the interests of the privileged few, but by yours. we will do everything we can to give you more control over your life. when we take the big call, we will not think of the powerful

but of you. when we pass new laws, we will listen not to the mighty, but to you. when it comes to taxes, we will prioritize not to the wealthy, but to you. when it comes to opportunity we won't entrench the advances of the fortunate few. we will do everything we can to help everybody whatever your background, to go as far as your talents will take you. we are at an important moment in our country's history. following the referendum we face a time of great national change. and i know because we are great britain that we will rise to the challenge. as we leave the european union we will forge a bold new positive role in the world. and we will make britain a country that works not for a privileged few, but for every one of us. that will be the mission of the government i lead. and together, we will build a

better britain. >> you heard the british prime minister, theresa may, making her first comments since she took the job a few minutes ago in buckingham palace. a really interesting speech i have to say. very gracious in complementing and thinking david cameron for his six years. you see her standing there next to her husband philip who is a banker in the city. the atmosphere is absolutely electric. there are hundreds of members of the press, all shouting, asking her to vote this way and that. i've never really seen anything quite like this. there she goes. everyone booing but she has now gone in. this is mostly photographers that want to get another shot. back to the speech.

she thanked the british prime minister, the outgoing prime minister, former prime minister, david cameron. she said he had modernized the conservative party, introducing gay marriage. she said he had done a great job of repairing the economy in the aftermath of the financial crisis. she elaborated on her vision for the united kingdom, and i think it's very interesting that she started with talking about the need to keep the union together that she was the leader of the united kingdom -- england, wales, scotland -- but then she talked about social and racial justice. she said she wanted to build a more inclusive and fair society that it is wrong that black men in this country are not treated fairly by the criminal justice system. don't forget that she was the home secretary here for 6 years, so she should know well what she's talking about, and that women are paid less in the united kingdom than men for doing the same work.

this was a leader that is already making her mark on british politics, and she's only been in the job now for about 10 minutes. scarlet: we do have the royal family tweeting out a photo of the queen receiving the rigtht, honorable theresa may. you can see theresa may curtsy in front of the queen when the queen asked her to form a new government following the resignation of david cameron. in her speech i thought it was fascinating that she spoke directly to those who she said were disenfranchised, those looking for work. she gave a clear mission statement. it was fairly consistent with the statement, the keynote speech she gave on monday in which she laid out her economic -- as well, wasn't it? >> yes, and i think it's very

different, perhaps in a nuanced way, but very different from the leadership we have seen from the conservative party under david cameron. it doesn't sound like she is a huge proponent of austerity and budget cutting and spending cuts, which this country has been through a lot of over the last six years. some of this is that she knows the referendum though it was about the uk's membership in the european union, was in some ways about a lot more. it was an anti-establishment vote, a vote against london. it was a vote against privilege, a vote against elitism. what we are seeing here is her attempt to address that in addition to saying you will -- though she did not really talk about it in the speech -- you will get your exit from the european union, but i also hear

you. this is what she was channeling here. i also hear what you are saying about social justice. alix: now that theresa may is the new uk prime minister, we will hear from more leaders including barack obama francois lond. what do we know so far from foreign policy? she has an upcoming g20 as well in september. >> foreign policy wise the elephant in the room is what the uk's relationship with the european union is going to be. there we know that she personally wanted the u.k. to remain in the eu. we can expect her to try to build as good of a relationship as the u.k. can get outside of the eu. beyond that she's also talked about the threat of vladimir putin. she wants to stay tough on russia. there's a lot of people that think that as the u.k. moves away from the european union, it

may get closer in its foreign policy to the united states. i think those are the general contours of her foreign policy. a lot like we've seen in the past. i don't think we will get any major changes, but perhaps a bit of a migration towards the foreign-policy objectives of the u.s. >> ryan chilcote, great work. thank you for the coverage of theresa may being confirmed as the new prime minister of 10 downing street. david cameron vacating 10 downing street, the home/office of the uk prime minister. he tendered his resignation to the queen earlier this hour. theresa may, the first female uk prime minister since margaret thatcher and also of the conservative party, the tories, is confirmed. there you have the proof, queen elizabeth inviting theresa may to form a new government. we have brought you every detail

of this historic day in the u.k. this is the handshaking of that moment. the new prime minister of the u.k. received congratulations from abroad. we will look for any announcement she makes on her new team. this is bloomberg. ♪

>> you're watching bloomberg markets. i'm scarlet fu in london, shery ahn in new york. we have been monitoring u.s.

stocks. shery ahn, a look at where the s&p and dow are. record highs but really have done very much this afternoon. shery: we are feeling the downward pressure. bloomberg julie hyman has the latest on the 30 year bond option. demand waning. julie: the yield 2.72%, the lowest in an auction of the 30 years on record. the bid to cover, 2.48. we have indirect bidders at a high level, 68 1/2% sold to primary bidders. i'm seeing much more positive feedback on this auction than others this week grade the 30 year yield moving lower, people buying treasuries. a move of five basis points. another little item of breaking

news has to do with valeant. angela of citroen -- andrew of citroen says he is shorting the stock again. he said it's nothing substantial, a small position and he's held it for a few weeks. down once again today on his call. broadening out to the wider markets and taking a look at this one, we have a mixed picture. the dow trading in a record on the closing basis. the s&p slipping a bit. it looks like it's a mixed picture in terms of commodities. on the one hand, copper prices trading at the highest since april. chinese imports of 22% in the first half of the year.

if you look at copper and the copper stocks, we are seeing gains there today. oil prices are trading lower today. we saw a drawdown in crude oil inventories. that puts a lot of pressure on these oil prices and it is pulling down energy stocks. >> still ahead, it started as the lowest expectations of the summer searching for yield. ♪

>> i'm shery ahn in new york. the rally that lifted u.s. stocks faltered as crude plunged. treasuries halted on a two-day slide and the dollar retreated.

where is the investment opportunity and where is the yield? john augustine is the chief investment officer at huntington. he joins our colleagues. >> thank you so much. we welcome everybody on bloomberg television. this is the bloomberg advantage. we are with the chief investment officer at the huntington trust. they have roughly $17.5 billion in assets under trust. we are getting resolution in terms of u.k. politics. how does that help you in your job in terms of getting visibility? >> that does help us with some of the uncertainty. over the fast week, we think it helps markets. congratulations to the people of written. -- britain. cory: what kinds of questions do you want answers on in terms of policy in the u.k. to understand

where you will allocate resources? john: we are favorable in general on the u.k. what were looking for now is what is the central bank owing to do, because the -- going to do, because the cut is so high that secondarily are they going to mix that was fiscal policy stimulus -- that with fiscal policy stimulus along the way. that makes it more attractive to us from an investment standpoint. carol: the world is not falling apart, though. john: right. carol: let's talk about the united states. we talk about market valuations being high. what makes you nervous about the u.s. markets? john: if earnings don't come true, if we don't end this profits recession, that makes us nervous. we will get an update after the close and tomorrow we start with

the jpmorgan. if earnings do not rebound that is nervous number one. nervous number two is if the economic reports we get over the next 3 days or so do not corroborate a better town from last week's employment reports. fundamentally, those are the things we're watching right now. probably the next trade will be the fiscal trade versus the monetary trade. fiscal policy we think is going to become more in the front page, more in focus, as we move into the second half of this year and into next year. it's a matter of who pulls the trigger first. cory: what is your take on inflation? there's lots of hints it is actually happening, whether jpmorgan getting employees and

trying to hire them, starbucks raising prices. there are indications that inflation is on the horizon. john: our economist at huntington said the same thing with services going up. we have seen some service pressure, wage pressure. surprisingly to us, it hasn't shown up as much as we thought it would right now with the stakes themselves, raising minimum wage, and some companies raising minimum wage. in general, we are neutral still on inflation. it has come back in the 1% range and probably stays there. carol: what are some themes you like right now? john: our equity managers today are moving into the semis. think of u.s. travel, marriott, disney. carol: what about the airlines?

you are shaking your head. john: they are beaten down but they are more cyclical. we asked our equity managers to look a little more consistency. it's one of the reasons we stay away from the homebuilders. we want more consistency from our clients at huntington. cory: there have been a lot of opportunities at forex. john: the forex now -- first and foremost, wish i could line up a trip to the u.k. secondarily, what we are looking at is some currency hedged funds. that is something on our minds now. so many of us -- not our shop, but so many got the dollar trade wrong the first half of this year when it went down. now we expect path of least resistance may be up. turns the hedge is what we are looking at right now. carol: fixed income world, where are we? john: individual bonds, we are

putting high-yield in for spread closure. carol: thank you so much. the chief investment officer at the huntington trust. i will send it back to you. scarlet: carol massar and cory johnson of bloomberg radio, speaking of john augustine of huntington trust, saying fixed income is a tough world right now. still ahead, exploring the high seas in style. inside the latest luxury cruise. ♪

>> flung bloomberg -- flown -- from bloomberg world headquarters in new york, you are watching "bloomberg markets ." scarlet: let's begin with the

headlines on bloomberg's first word news trademark has more from our new york newsroom. mark: british prime minister theresa may said she plans to lead the u.k. in the spirit of unity and build a country in her words, that works for everyone. following a meeting with queen elizabeth, buckingham palace released an image of may offering a deep curtsy signaling she accepts queens invitation to form a government. may takes over from david cameron, who resigned after britain's vote to leave the european union. cameron said it was, in his words, the greatest honor of his life to serve as prime minister. japan's emperor has said he wants to advocate at some point in the future, according to japanese tv network nhk. he is 82 and has been emperor since his father died in 1989. under the postwar constitution drafted by the united states the japanese emperor is the ceremonial head of state.

a new poll shows donald trump gaining momentum in several swing states. according to a university survey trump leads hillary clinton in florida 42% to 39%. less than a month ago clinton had an eight point need. -- lead. the two remain tied in ohio. the nation's top law enforcement groups are urging the two presidential candidates to back an overhaul of the criminal justice system tray to the letter by police and prosecutor groups is aimed especially at donald trump. hillary clinton supports making changes to reduce the prison population. mr. trump calls himself the law and order candidate. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. scarlet, back to you and london. scarlet: with a $10,000 a night

sleep it has been called one of the most luxurious ships ever built. earlier today we spoke with the ceo of norwegian cruise lines and he discussed attentional launch concerns at a time of lyrical and economic uncertainty -- political and economic uncertainty. >> demand for this vessel has been through the roof since the day we opened up for business about 18 months ago. she has sold out all the way through the end of two -- 2016 and a good part of 2017. the kind of customer we attract at the seven seas level and this ship in particular, they are very resilient to economic ups and downs. the are resilient to the kinds of geopolitical events we have seen this year. it's a great time to launch this vessel and i'm very happy we did. shery: where are your customers

primarily coming from at the moment? >> regent 7 seas -- our three brands, north american centric company. about 80% of our business comes from north america, the bulk of it coming from the united states. mid to high single digits we source from the u.k. and europe with the rest of the world contributing the balance. it's heavily towards the u.s. and the u.s. quite frankly the economy is doing well. as long as the u.s. economy does well, we do well. even in tougher times, the industry has shown time and time again of its resiliency. this is the type of industry that -- build ships and they will come. this vessel is no exception. >> the line that got me was the

most luxurious ship ever built. a, prove it. b, was there a benchmark before you and you said, we've got to reach that and better at? -- it? how does one go about the process of coming to most luxurious ship ever built? >> you take no shortcuts. you talk to your customers. we did focus group after focus group. we wanted to know what they wanted in a cruise. if you walk throughout the vessel you can see that luxury and elegance, timeless elegance abound everywhere. the amount of space that is dedicated -- this is a 56,000 ton ship. these are not cabins, they are suites. they all have balconies so you can really lounge and enjoy it. they all have furniture. four gourmet restaurants.

the $10,000 a night regent suite comes with everything you can think of, including a private driver and a guide at every port to allow you to explore that destination to its fullest. it comes with a 24 hour a day butler, $500,000 steinway designed by dakota jackson. and it on hundred $50,000 number --$150,000 number one bed. at my age it's difficult to sleep throughout the night. i been sleeping throughout the night every single night and i love it. >> you sold me. $10,000 for that sweet. talk to me about breakfast. if you are spending that type of money -- brexit. if you're talking about that type of money, the #10% since the you -- uk referendum. will there be any impact or not? >> we have not seen it right we

have been monitoring our bookings across our three brands and today the vote was tallied. you saw what happened to the stock market, the valuations immediately after and it's been less than 2 weeks. i don't think the consumers had time to react. so far we've seen no negative implications whatsoever. business in the u.k. and eu is as good as it was prior to the vote. >> that was the norwegian cruise lines ceo. shery: it's that time of day. time for the mystery stock. you can't say the stock never tried, but now it needs less help around the house after offering free membership. we will reveal our mystery stock next and this is bloomberg. ♪

>> this is bloomberg markets. i'm scarlet fu in london with sherry and in new york. bloombergs julie hyman has a big reveal on today's mystery stock. you can't say today's mystery stock never tried to read it needs less help around the house after offering a free membership. julie, i feel he is has something to do with a fitness club or gym membership. julie: it doesn't. the first part of the clue is a rolling stones lyric. the song is "angie." angie's list. the company is offering free membership nationwide.

this is the price since the ipo of the company in 2011. this is the latest thing that it is trying trade angie's list is an online service that offers recommendations for various household chores to get done or handyman, things you can get done around the house. the company is announcing free access to reviews and 2 new freemium membership. it has a silver membership, a gold membership and then there's the baseline green membership that offers access to free reviews. it is surging today, up about 6%. i want to talk about a couple other stocks we are seeing rise today. juneau therapeutic up sharply per u.s. regulators allow the company to resume a clinical trial of its lead product. it had been halted for safety reasons. it was to treat a blood cancer.

also quickly, we have been watching shake shack today. shake shack has been surging. there hasn't been anything confirmed here. there is some speculation having to do with mcdonald's. unconfirmed, but wanted to point it out because it does appear to be moving that stock. scarlet: i had a shake shack in london just the other day. it tastes just as good in london . shery: the bank of canada left interest rates on hold up 50 basis points while cutting growth forecast for this year and next, with more of the central banks remark on monetary policy we are joined by pamela ritchie. i'm going to start with boc's decision to leave rates on hold. not much of a surprise there. pamela: not much of a surprise.

dovishness in the tone of the remarks as well somewhat expected. we did see the canadian dollar bounce back after a one-week high on the decision to leave rates where they were and also some of the comments. we just spoke to blackrock canada strategist. there seems to be overall optimism, the governor of the bank of canada in his remarks today perhaps warranted. the last time he was speaking publicly, brexit had not happened. oil prices were lower at that point. it had been unclear what the full cost of the wild card was going to be. if you look at where we are from last time things have improved. that was expected by the markets. >> speaking of oil prices, and the elders of fires, what specific comments did the central bank make about those wildfires?

pamela: 1% is the overall hit to gdp that the bank of canada's these that taking in the second order. some of this we already knew and they made some projections before. the bank of canada has lowered its growth rate trade for the overall economy for 2016 growth of 1.3% is down from 1.7%. and also, for the year 2017 down to 2.2% gdp growth. a slight adjustment there. they did touch on housing in toronto and vancouver. at the same time, reiterating his stance. he looks like where prices are would yanis -- unsustainable at the levels there at right now, but probably not a whole lot of

a national perspective of the bank of canada can do to make some real impact on that. shery: the governor's predecessor mark carney expected to lower the rate for the bank of england tomorrow. of course, trying to deal with the shock of the brexit. what did the boc governor have to say about that and its impact on your economy? pamela: the impact on our economy almost nil according to the bank of tentative, .1% impact. -- canada, .1% impact. what the bank of canada governor seem to comment a lot about was in his mind how well the markets reacted in a sense. there was liquidity. we did see reaction to a shock. it was a shock to the markets. and the markets figured it out and we did not see any sort of major selloff and then major

bounceback. i guess he was happy that markets performed the way they did. he did say it will take time to understand exactly how this will play out in the long-term. one other thing to point to, business investment in canada something he's betting a lot on as well as the export of nonenergy goods. many decisions surrounding that investments he sees not coming until after the u.s. election. shery: thank you for joining us pamela ritchie of labor tv canada. -- bloomberg tv canada. scarlet: it's time for the bloomberg business flash. chinese government hackers were likely behind security breaches at the fdic in 2010, 2011, i 2013, according to a tweet from reuters. the fdic's inspector general reported two years ago that cyber criminals attacked almost 100 computers, stealing tax

years -- taxpayers' personal information. shery: the change comes as investors turned cautious. treasuries and related security account for nearly 40% of the fund's assets in june up from over 36% in may. that is according to the company's website. scarlet: disney is getting $267 million in tax breaks to construct a luxury hotel next to disneyland. the city of anaheim approve the proposal yesterday. disney says it got a good deal. it estimates the hotel will generate $750 million in new revenue for the city over the next 4 decades. and that is the bloomberg business flash. shery: coming up, the federal reserve out with his page book at the top of the hour.

first, we discuss how the u.s. central bank president these the economy. ♪ -- sees the economy. ♪

shery: i'm shery and in new york scarlet fu in london. scarlet: confidence among investors is giving a list to emerging-market stocks. take a look at this chart. the white line is the msci emerging markets ratio, estimated earnings. that is coinciding.

it's been steadily rising here, the white line. it coincides with a drop in expected volatility, which is the blue line. that is its lowest in a year. third valuation has generally climbed and is at a 14 month high, the highest since may 2015. we know in terms of central banks, the bank of a canada -- the bank of england will be meeting tomorrow morning and could cut interest rates by 25 basis points, even potentially 50 basis points. the fed has been clear, it is on hold. there's a lot to consider here if you are an investor in emerging-market assets. mark mobius was quoted as saying recovery from the brexit vote that we saw has created bargains among some consumer companies particularly those in brazil and china. >> we are seeing this surge in asian stocks as well.

we are seeing the msci asia-pacific gaining more than 3.5% at an 11 week high. if you take a look -- we have now this bullish indicator. look at this chart. we are talking about the msci asia-pacific index. that is climbed above its 200 day moving average. that would be the yellow line. what we are seeing, a bullish pattern known as the golden cross. the two paths changed positions. we had the nikkei at the highest since june 23 23. -- june 23. climbing more than 20% from that january low. a lot of the money we are seeing u.s. stocks are gaining but we are also seeing outflows from u.s. markets. a lot of them going into emerging markets. a lot of activity happening right now.

scarlet: the great rotation has begun. shery: it has, capital moving across borders trade let's talk about the central banks. numerous speaking engagements in place right now from various fed presidents this week, and this having a big impact on markets, on expectations. officials were able to express their assessment of recent events great be june payroll surge and brexit vote, in particular. yelena, what has been the general tone from speakers this week? >> in general, said speakers toned down their message after the dismal may report. they will probably not be very quick to try to sound the all clear signal.

we have heard from different members of the fomc from different speakers and they recently toned down the message. but they need to reengage and deliver the message again that if they are going to deliver rate hike in september -- the probability according to the markets is below 15% right now. scarlet: when you have different fed presidents speaking, some are voting members of the fomc and others are not. the dallas fed president, a nonvoting member. patrick parker of the philadelphia fed, nonvoting member. do their words matter less? >> i think everybody's message really matters. each president voting and nonvoting member of the fomc matters because this is a consensus decision.

chair yellen will deliver her remarks, and she will try to incorporate everybody's opinion. but obviously the markets listening to the voters more. we have heard from more hawkish voting members, recently president george suggested that she wants to see higher level of interest rates and she might be sent at the next meeting. shery: we have the fed's beige book at the top of the next hour. what are we expecting their about the state of the economy? >> the page book will cover the period from the end of may through the month of june. we have seen it pick up in economic activity according -- we saw a pickup in hiring pace. it should be ok and should

indicate that overall pace of economic growth has been moderately increasing. we should see a pickup in consumption but there will be some pockets of weakness because of the strong dollar. scarlet: how relevant is the page book for -- beige book for the fed? it's not really quantifiable versus some of the other metrics the fed relies on. how does janet yellen full that into her assessment of the economy and balance of risks out there? >> the tone of the beige book, if it shows moderate increase in economic activity, will be comforting for the fed. slack continues to diminish. my system, wage pressure building. it will be more relevant this week to see what developments we expect from the fed.

shery: do stay with us, because we're going to continue that conversation in the next hour of bloomberg markets. we will break down what it all means. this is bloomberg.

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>> it's 2:00 p.m. in new york. >> welcome to "bloomberg markets." ♪

from bloomberg world headquarters in new york. david: here's what we're watching. >> the queen has asked me to form a new government, and i've accepted. david: we are breaking the fed beige book, which has just come out. anecdotal information. to just read a few headlines, outlook for oil and gas improving in kansas city and dallas. we are seeing this book prepared by the st. louis fed. price pressures remain slight. commercial construction up modestly just some of the headlines from the federal beige book, which comes out a times a year, the latest one out now, something policymakers will be looking at as they make their next decision. vonnie: