♪ anna: the big gamble backfires. election results show a hung parliament. than this time, more anything else, this country needs stability. if, as the indications have shown, if this is correct, the conservative party has won the most seats and probably the most votes, then it will be incumbent upon us to make sure we have that period of stability, and that is what we will do. anna: corbyn's comeback. the labor party leader says the people have had enough of may, and she needs to resign.

>> i am very proud of the campaign my party has run. a manifesto for the many, not the few. i am proud of the results coming , of people voting for hope for the future and turning their backs on his -- on hysterically. anna: u.k. futures turn higher. ♪ anna: a very warm working for you. i am anna edwards. and i am manus cranny here in london. anna, what a spectacular pew hours we have had. let me show you the map. ofs is the personification change, as corbin said, politics

has changed, and by gosh, the landscape of the british isles has changed. look at that, north of the border, we turn blue. there is steep -- their seats to both thehe snp labour and conservative parties. at the moment, we have a hung parliament. 306 seats for the tories, 20 left to declare. we have an election special for you. anna is outside parliament. guy johnson is on market reaction. matt miller is at the heart of it all on the trading floor. anna, let's take it straight to you. david lee, you have spent the last half-hour with him, he says we are looking at another election before the end of the year. i cannot take another one. anna: i know, i think we have had that from two guests this morning. we have not worked out the results of the first election, and two guests talking about another election by the end of

the year. let's stick to what we know so far. parliamenta hung here in the united kingdom. no overall majority for the conservative party, even though they will be the biggest party. conservativeshe seats, that is a loss of 11. this is an election that did not need to happen. this was called by prime minister theresa may to increase her mandate, the mandate of the tory party, and her personal mandate. she seems to have been unsuccessful, the gamble has not paid off. tory party. for the there seems to be a number of ways to divide the country, north, south, earl, urban, young and old, nationalist and globalists. who will be prime minister by the hand of the day? it is still a very uncertain question. manus: i think the question now

on a lot of people's minds is who might challenge theresa may? wascalls an election that not necessary, and many will accuse her of squandering a considerably -- never mind the considerable -- a lead. it is uncertainty, uncertainty, uncertainty. he was focused very much on the liquidity. sorry, go ahead. you crack on, we will get to guy and a second. who leadsquestion of the party, couple of my colleagues making the point that we have not yet heard from any big voices in the tory party suggesting they want the challenge. a be a resignation doesn't come very quickly, but we have heard from some saying she needs to stay put.

and a not so prominent voice in the party saying she needs to consider her position -- theresa may needs to consider her position. there are many names we could throw in the ring. indeed, maybe even david davis. let's get to guy johnson he is on the markets. futures are indicated higher. guy: let's talk to what we are seeing at the moment. we have a liquidity story with u.k. assets. we have come through the dark side of the moon phase where we would not have the liquidity we normally expect. clearer picture and understanding of how the financial markets will react to this. some of the normal mechanisms that we have been operating under as of late have reasserted himself. the first thing to point out, this is a very isolated story. the u.k. story is not one driving a risk off sentiment around the world.

you can see that clearly on the gmm function. the british pound stands out there. what you are not seeing is the strong bid for the yen, you are not seeing a strong bid for the safe haven assets you would normally expect. that is the first takeaway. this feels like an isolated u.k. story. return to point is a the normal mechanism. the pound down, the ftse up. that is what we are getting back to. we are getting a better trade out of london, a better picture out of london, and you see it reasserted itself. if you tick the future box, you get this. u.s. futures had a negative open. we have a picture where it looks .k.e you clean -- u equities will outperform. it does not look like you will see a similar story for continental markets. liquidity comes back into the markets. another thing to mention as well, what we have not seen is a

hong parliament has been -- a honda parliament has been called by broadcasters. it will be interesting now over the next hour to understand which way sterling will break out of that, because from a technical point of view, you have that story pushing us this 80the center of level. it will be interesting to see how we breakout from that one. not too far away from here, the government and the bank of england has a few thoughts to go through this morning. i bring up this chart here. this is financial conditions in the u.k. the higher this goes, the easier financial conditions are. heavilyey was criticized for cutting rates. there are a lot of arguments around this to see how the big deals with this story, the uncertainty surrounding fiscal policy and what is happening with the pound.

i want to point out, the financial conditions through this year have largely gotten ander rather than tighter, despite the fact that many people will be calling for rate cuts surrounding this, i think it leans against that, the data is softening at the moment. manus: back out to anna. anna: thank you very much. to matt,g to hand over because he is on the trading floor. matt, we have talk to the market reaction with guide, where it has been pronounced and muted. what is the response of the people behind you? in fact, one of the points guy made is interesting about what happens with the bank of england, what does mark carney do. i've not talked to anyone who thinks he will make a move, but

the question has come up. it is another point of uncertainty that traders have to look into. what will happen with stocks? we see futures pointing to a positive open. we still have not gotten a lot of volume in the pound, which is the only asset class trading in any size on this. it is not carrying through on other asset classes. u.s. features have a turnaround. overnight.ts are up not really assessing anything else, it is isolated to the u.k. and the cable trade. you did not see a lot of carry through into the euro pound -- into the euro-pound, which you might have expected. the uncertainty leaves a lot of questions open. even after that hung parliament headline came through from bloomberg and others, you have not seen a lot of action yet. very early in the morning, and the one thought that i have heard down here and continue to hear is, why go along at the pound into the weekend? manus: there is the closing line.

matt, good to have you with us this morning. me, and ak is beside is at westminster. if you are tuning and it is 6:09 a.m. in the u.k. we have a hung parliament. she did not have to do it. she squandered her opportunity. will she last the 24 hours? think she will last the 24 hours, but not the weekend. she will probably resign over the course of the weekend. the tory party is quite ruthless in getting rid of its leaders when it is done with them, you saw that duncan smith. -- you saw that with duncan smith. who steps in, however, remains to be seen. it will probably be a big beast, and they need a firm position on brexit. that is why the bookies are making boris johnson the favorite at the moment.

anna: that will be interesting to watch. we might have a clearer lead on personal convictions for brexit. does brexit remain a guiding force here for the political story and for the investment story, jeremy? >> i think it has to. this election is still a brexit election. we are pulling apart, not all of the votes are in, not all of the seats have been announced. we are waiting to see and read through the tea leaves in terms of that this go picture here. the people have spoken, we are not sure what they has said get. and the grand scheme of things, everything needs to be viewed through the kaleidoscope of brexit. though she make a deal with the unionists? talking about things in 10 days time as originally planned? anus: you said to make him look, the economics of britain have taken a knock for the election.

the majority has been raised. but the brexit barometer, it is getting windy, and it will get windier over the next six to eight months. talk me through an economic point of view. from theuity, negotiation of when we went independent, that is what we look at. what does that do to the economic policy and inflation outlook for the u.k.? >> inflation outlook looks higher. prices are going higher, but wages are continuing to run lower. it looks like that will not change anytime soon. in with this and maybe be a voice for anti-is stare fiscal easing -- easing byrity, fiscal

increasing social care, whatever that may be. that is a lever that takes a long time to pull. it takes a long time to come through. as fars having a parliamentary impact in two months, three months, six months, the trend is very much still in place. it is interesting to consider what business does in this environment. on the one hand, if we see more fiscal spending, it might encourage business to match it in some way, but on the other hand, we are heading straight to another election in the last part of this year, then that matters to the u.k. economy. investments in trade of the two things that will make brexit a success, if we continue to brexit, which is another question that people will ask themselves this morning as well. we will not talk about trade

until the divorce deal is done and the deal with to baltimore -- with gibraltar. election, i do not think that will really change. what needs to change is jeremy corbyn is talking about investment change, and that will urge investors to put money in the u.k. anna: what are your questions around brexit as we look to the days ahead? are they about whether we brexit or whether it is how hard or soft? is the regional model back on the table? >> i certainly think that david morning we puts something to the electorate that we wanted out of the customs unit. looking at the votes we have

seen so far, you could say there may be has been a slight reduction of that. not been policies and the labour manifesto, and they have increased considerably. there needs to be a conversation in the next few weeks about whether we see the tory lead, immigration control around a single market, whether headeds to flip on its and say we choose markets over immigration and lead from there. politics are messy at the best of times. the referendum was a bomb onto u.k. politics, and this will continue those tremors moving forward. manus: stay with us, we have a little more to get through. that is jeremy cook. plenty more coverage on the election to come. we will be joined by barbara judge. at 6:15e go to a break

a.m., if you are waking up, this is the palace of westminster facing a hung the parliament at the moment. -- facing a honda parliament. rliament. a hung pa will theresa may last the weekend? this is bloomberg. ♪

manus: it is 6:19 here in london. we understand that theresa may will give a speech, this is from lcb radio. lcb reports she will give a speech at 10:00 this morning. is onn secretary johnson the list. guy johnson, take it away. about what isk going on right now. i want to go back to this point that this is a u.k. centric story.

i want to reinforce that point as we work our way through the next few hours. we are not seeing the risk off story that we have seen in big political uprisings. this is a domestic story. the british pound does stand out on the gmm screen right now. everything else you need to look at, ignore that, look at everything else. nothing else on the move this morning. the bloomberg dollar a -- dollar index is up by 0.2%. the yen has moved up just a touch, as london traders have come in and taken over the books from asia. action, but inme terms of the order of magnitude, i would argue it is not particularly great at the moment. the yen has bumped a little bit. the book gets transferred over the next hour, hour and a half, we start to get a better understanding of what is going on. let's talk about where we stand on fair value. we have watched what is

happening with the fair value surrounding the ftse 100. been negative.s we are getting liquidity back in and getting an understanding -- the pound down come up ftse up seems to be in place this morning. i want to come back to this wedge. it looks like we are breaking out from the upside. it is interesting what we are seeing on euro-sterling this morning. we are breaking out of that wedge, it is an interesting story. the london trade is breaking us out. another thing i want to mention, and i will come back to this, is how does the bank of england respond? the white lines here is financial conditions in the u.k.. higher the line, the easier conditions are. the blue line is the u.k. surprise index. surprise index has been going down. the uncertainty surrounding what has just happened will probably provide that with a further downward leg. does it keep conditions nice and easy to try and deal

with the difficulties we will go through? the uncertainties the u.k. continues to face. back to you. anna: guy, thank you. now that the markets have reacted to the spectacular news. what's get fully up to date here with shery ahn and your first word news. let's continue to flush out what is happening in the u.k. theresa may's future as prime minister has been thrown in doubts as election results show a hung parliament. a conservative landslide was widely expected, but has now been replaced by the reality of a hung parliament as voters reject may's appeal for a personal mandate to negotiate breakfast. inthis election was called order for the prime minister to gain a large majority in order to assert her authority. the election campaign has gone on for the past six weeks.

i have traveled the whole country, i have spoken at events and rallies all over the country, and politics has changed. politics is not going back into the box where it was before. shery: a hung parliament could see britain without a fully functioning government, just days before brexit negotiations are scheduled to begin. that could affect the two-year timetable for negotiating a deal. prime minister theresa may called for a period of stability, as the country begins negotiations with the eu. in the u.s., fired fbi chief accused president trump of lying and if aiming him. after two and a half hours of trumpony, comey said shifting responsibility were "lies, plain and simple." he says he kept mum tho--

memos of their conversations because he was afraid the president would paint balls pictures of their conversations. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am shery ahn. this is bloomberg. thank you very much. let's go to twitter right now and our guest, jeremy cook. this is them -- kind of comment that will grip the markets. need to like we might timeout on brexit negotiations. it is time for everyone to regroup. he is the former prime minister and finance minister of finland. he is very much a friend of bloomberg. from ams up the risk european perspective, a hung parliament. we do not know who is in charge. we may need a timeout. >> we may give them a sensation

of hostility, if we can put it that way, but certainly the uncertainty around the u.k. election at the moment, this is not a good thing. this is not merkel and -- this macron-- merk anel and are not going to wake up and say, thank god it went terrible. things done ast quickly as possible as much as we do as well. in the grand scheme of things this is a box over both of our houses. we may need to take a timeout and reanalyze. up withremy, to keep the conversation, i have found another blog from markets live. he is talking oscar wilde. looks like carelessness. talking about the european

response here, they do not know who they will be dealing with. they don't know what kind of brexit the u.k. is going to be asking for anymore. >> no. and this is the thing that we now need to look at as to the original plan, the tory plan, which was to come out and say that we will cut migration down to a low 100,000. we will do that by not allow that. -- you will do that by not allowing it. changes int stance the u.k. parliament, given the movements of labor, the increase in votes for the liberal democrat committed to the movement of free markets, we will have to wait and see. >> we have had oscar wilde, we have had shakespeare, we have had isolation. jeremy cook, first chief economist, stay with us.

remember, if you are a bloomberg customer, it is election watch on tv go and we are streaming live throughout the day on radio and tv.

♪ anna: welcome back, everybody. this is a special edition of asoomberg daybreak: europe," we bring you the election results from the u.k. a surprise results here, a hung parliament. it looks like the most likely outcome. we have the pound edging slowly lower once again, approaching lows. let's talk about some of the politics that led up to this position and focus on the scottish position. conservative is made major gains in scotland, taking down major names along the way. thetheless, the leader of

says the election results put the prime minister, theresa may, in a difficult position. >> i think one of the biggest issues tonight is that this is a disaster for theresa may. she called the selection unnecessarily. she arrogantly thought she would push opposition aside and have a landslide. she has had an absolutely disastrous performance. for now, we're joined in edinburgh. talking tough,on but the result is a real disappointment. one of the bright spots for the conservatives is their performance in scotland. it was somewhat expected given the campaign in scotland had a different dynamic ban in

england, which has been whether there should be a second independence referendum. the snp pushing for another referendum, and the conservatives taking on the mantle of the defenders of the union. in a place like the northeast and borders will they have made strong gains, the conservatives, places where they have a little bit more lukewarm -- with a have been a little more lukewarm towards independence and more divided towards brexit. it was a reflection of that. manus: it is interesting to see these goals. conservatives and labor is snapping at the heels of the snp. davidsonurprise to see in scotland doing so well, and would she have it there is a leadership challenge? >> i don't know about the input. what she did clearly in the

campaign is, for example, looking very closely at what went wrong, and when theresa may went out withcampaign is, ft did not go down well. davidson was very clear when she came out and said, that would not apply in scotland. she had distanced herself from various things. she ran a different campaign. she knew full well there were things that would not resume in scotland. she has been seen as one of the rising stars. she also had a good brexit campaign to remain in the eu side. i expect to see a lot more of her. anna: we might do. let's bring you into the conversation. what is the latest thinking on how long theresa may last? what is the process if she decides to go, and bring us up-to-date on the vote itself? minority, conservative party

government, hung parliament. >> we are looking at a hung parliament. at the same time, the conservatives could scrape a majority if they went into a coalition or did a deal. but we are talking a very thin majority. that theyo remember don't traditionally vote in parliament. the tories may manage to scrape together something with another party, then we could have a government. however, the point is this election was called for theresa may to get a personal mandate on her vision of brexit, that also on her vision for the party and her former conservativism. the answer is a resounding no. , speaking toweek tory sources, the damage have been done. she was already being seen -- even if she wanted majority, they said i can't see her

hanging on. i cannot envisage her leadership hanging on for more than a few months at best. manus: i want to bring a quick chart in for our viewers. this is about standard deviations. we try to gauge the momentum in the market. -edging.e we are breaking two standard deviations. that gives you the sins of the wakening risk. we rallied to 1.5%. we are retesting on the downside. ofhave a rollcall antagonists who might challenge. let me see which one tickles your fancy. david davis, amber rudd, philip hammond. it is going to be a beast. that is what i am hearing. if there is a challenge. >> you have forgotten doris, of course. my apologies.

you are on the list. >> not want to forget. when you think about support in the party, it is a rejection of hard brexit. not a perfect candidate, but he is someone with a lot of support in the conservative party. he is very popular indeed. you cannot rule him out. he has said he is not interested in the top job, but why were you be in politics if you were not? amber rudd did a good job standing up to theresa may, but she held onto her seat by her fingernails. could this be the next leader? it is all on the table. crucial will watch that conversation around leadership there, and we will he or from the prime minister later on.

story, on the scottish is another independence referendum completely off of the cards, not within the timetable that sturgeon wanted? >> i would be highly surprised if it is in the timetable she wanted. i would not say this completely off the cards. we will have to see how things pan out. still has a majority see, they still have a mandate, compared to how they have performed historically, they are still way ahead. think it is too early to say that it is off the table. they are definitely wounded. it will be -- the timetable wasn't always necessarily there anyway. the other key thing is you have if the majority. if that does not come to

fruition and there is another deal going on, it could be that the party ends up with fewer mp from westminster, because their votes might be needed. manus: rodney, thank you so much. that is rodney jefferson in scotland for us. svenja o'donnell here in london. our chief economist is back in the conversation. svenjato so then you -- on this chart. we are reawakening our risk, sure, and medium, and long term risk. >> i still think it is in sterling-dollar. i think it is in cable. the mood at the moment, it is a fair move, but it looks like u.k. traders will give sterling a little bit of a kicking over the course of the day. take you back to 2010, the last time we had a hung parliament, the initial move was about 2%. over the course of the next week

, we saw an additional 3.5%. within this.fect while he may have a majority for conservatives in the irish party, a rainbow coalition does not look likely it would stay together very long. that props the question of another election further on down the road in parts of 2017. maybe the move in 2017 is more than it was in 2010. anna: sanya, an interesting venja, ans interesting point. if we do not see any tory coalition lasting and if that were to collapse, it could be called on to some involvement in the coalition. the fact that we are talking about so many outcomes at ex: 39 in the morning, it is unclear what happens here. morning, it is

unclear what happens here. to see their statement before the selection, they could be a decisive party in labor trying to form a large government or this rainbow coalition which is one of the scenarios that people thought unlikely, but is now looking take a strong possibility indeed. the thing with theresa may speaking, it is mayhem. we do not know what is happening. to see thet got total tally, and see with the party leaders decide to do next. manus: svenja, thank you so much. svenja o'donnell, and jeremy cook. here. to pull in mlive this is a murdoch newspaper.

fear in brexit. dismay.esa by oniller is standing the trading floor. the two standard deviation moves on sterling, is it getting more frisky. give us an idea of the floor. it is getting more picked up. since you saw the hung parliament headlines coming across from the major broadcasters, and theresa may's questionp coming into in the last hour or so, we have seen more activity. interestingly enough, on the sell side. the pound is holding up with its 100 day moving average. we continue to see here at ubs

big blocks coming through on the sell side. there is a lot of activity, traders have been here since 6:00, 7:00 yesterday morning, and they continue to trade through a 24 hour day and are starting to see real action. manus: we have been chewing the cud, so to speak, in terms of political outcomes. blogound a beauty on the -- anna found a beauty on the blog. we have a whole variety of and oscare in that, wilde. what is the chat on the floor in terms of kanter risa may last the weekend? is there anything in terms of that? is to managecern to lose 30. the talk is, what would happen if teresa may is ousted -- theresa may is ousted, and

another conservative comes in to replace? what he or she hold that office long, if another round of elections is held in less than a year? there are names being thrown around. will theresa may continue to hold power? obviously, these are market participants, not political commentators. you can be sure there is a fair amount of both going on. manus: matt, hunker down. it will be a long and on be day. guy johnson is at the markets board. the hung parliament is not good for markets, but the worst possible outcome is perhaps under a corbyn victory. it looks like the worst tail risk is maybe off the table. guy: what is interesting about that is we pulled a bunch of currency strategists for this election took place, and it seemed like a hung parliament becauseworst outcome,

the pound does not like uncertainty. that is starting to switch a little bit in terms of how the market perceives the various outcomes, the various risks attached to it. contra to what we saw in terms of the markets going into this. we are seeing some weakening going into the pound. we indicated the books being hounded -- handed over to london. london probably has a better read on what is going on. we are seeing the pound of softening up a little bit. we are isolated, this is a u.k. story at the moment, not seeing this broader risk off sentiment radiating out from the u.k. into other financial markets. that is the broader takeaway at the moment. a lot of confusion, a lot of and lack of understanding about what will happen next. but it seems to be a very u.k. story right now. we're counting down to the market open.

at the moment, it has to soften .p a little bit it is interesting to see how those relationships are working. the other thing i want to mention is, we talked about this wedge earlier on. people are focusing on the cable rate probably more than they are focusing what is happening with euro-sterling. this wedge has broken out firmly. the market has made it clear that there is further downside for sterling. i want to come back to this chart again. should not england be ignored in this environment. it does not know how fiscal policy will emerge are how the political story will look. numbersnows that the have been softening, and financial conditions are fairly easy. it would like to keep those missions easy, so the white line as it goes up, financial conditions. the blue numbers have been line down, that is the surprise index. the uncertainty story gets amped

up a little bit more. manus: it does indeed. pox is hanginge over europe. let's go to shery ahn with your first word news update. u.k. party leader jeremy corbyn has called on prime minister theresa may to stand down. that comes as the result of the snap election she called with a hung parliament. a conservative landslide was expected widely. >> the prime minister called the election because she wanted a mandate. has, the mandate she's got lost conservative seats, lost votes, lost support, and lost confidence. i would have thought that was and make go, actually, way for a government that will be truly representative of all the people of this country. parliament could

see britain without a fully functioning government just days before brexit negotiations are scheduled to begin. it could upset the two-year time. two-year time- period for exit. over in the u.s., fired fbi chief james comey has accused president trump and the white house of lying and defaming him during 2.5 hours of testimony on capitol hill. comey said the shifting excavations for his dismissal were "lies, plain and simple." kept detailed memos of the conversations because he feared the president would ultimately paint a false picture of their encounters. then chosenistration to defame me, and more importantly, the fbi by saying the organization was in disarray, that it was poorly led, that the workforce have lost confidence in its leaders.

those were lies, plain and simple. shery: turning to the middle east, donald trump has offered the secretary of state to in the the standoff middle east. this came after he met with rex tolerson and jim mattis discuss the conflict. any role tillerson might play is complicated by conflicting messages, including trump tweets in which he seemed to back saudi arabia over qatar. tom material costs continue rise. conservative -- consumer prices rised, matching forecasts. the u.s. energy secretary has dismissed criticism of donald trump's decision to pull out of the paris climate accord as political. he spoke exclusively to bloomberg in beijing.

>> they are wrong, because i think they are coming at it from the political side rather than the reality side. i look at it from the reality side. we are going to continue to be leaders in clean energy. that is going to happen. popular issue of, oh somehow you don't care about the environment, that is political rhetoric. shery: global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the .loomberg at top manus we have a hung parliament on our hands. anna edwards is outside the palace of westminster. you have the head of economics

and business finance with you. take it away. to it.et's get good morning to you. a hung parliament. as our guests in the studio said earlier this hour, the people have spoken, but we are not sure what they have said yet. do we wait and see? forecasts, ithese is another way to rethink of fluctuations in the impact of brexit going forward. this result, it will be hard to know. anna: where does this leave appetite for investments? we spoke to an investor who says this could be key to the u.k.

economy. to what extent do we see business cautious because of political uncertainty? a hung parliament may not look stable. we may find ourselves in another electoral cycle. that may not encourage investors. may be harder to know, but -- this wills generaly add to the attitude, which is not to long-term business investments. anna: what do we expect on the fiscal front? ideas, whatfor new would businesses like to see on the fiscal front?

can they stimulate economy with brexit? where does the government need to do that spending? side, they make a on things like tax rates. taxes have been going down, and are still going down every couple of years. side, it ising unclear of national importance, and otherairports well-known projects going ahead to push the economy. brexit is the biggest challenge the next couple of years. the issues at home, raising the economic flow, and domestic issues.

it is amazing how much we thought this will be all about brexit, but it is also about some other issues. social care was something on the policy fronts that caught many off guard. on the subject of brexit, do businesses have any conclusion about the results and what this means for brexit? some of the conservative policies around brexit, leaving the single market, for example? >> it is far too early to tell. what businesses want is a pragmatic deal going forward. they want businesses to get access. -- this is aes practical question. if we are trading with germany, how many more trades will we have? how do i get in the market? may: i know that the bcc

not want to make a call on whether that means staying in the single market of the customs union. are things looking uncertain us to whether or not we should be reopening the conversation? >> we will wait to see what policy says. is a good clear on and possible deal. we want issues at home to be dealt with. all of that from the survey that across the economy, and that is key going forward. anna: thank you very much for joining us. suren thiru. manus. manus: let's check in with cable. , down overerating 2%. we have now moved over to standard deviations in our trading session. me he is thes with

chief economist. building in terms of the downside. the market is beginning to simulate some risk assessments. >> it will take out some of the phase over the course of the day of what it means for the near-term political aspects, and whether this means -- whether this maytive over hey, mean a soft brexit. the place you will see that is in a slight rebound of the pound. at the moment, people are saying, we have a hung parliament and newspaper headlines calling for theresa may's head, we will probably have another election, there is no way i want to hang onto the sterling. manus: let's talk about the headlines. this is "the daily mail.may's" this is the mail online. very different facial expressions. this is a heartland of tories. theresa may we expect to make a speech at 10:00 a.m. according to lbc.

she has blown it. that is the assessment of her heartland support and newspaper. may" onave "theresa dis the front page of "the sun." you take that away and talk proposals in place are joined the link by the people who carried the editorials to say that we should go out and vote for this person. that policye in vacuum, you have a two day break that people will not want to be long on cable. manus: thank you for giving us your time. that is jeremy cook. it is 6:56. coming up on this pretty important day, we get reaction. we speak to the finish prime minister. primethe former finnish

minister. what does this mean for the political future? will theresa may last as the current situation that she finds herself in, a hung parliament? stubb gives answers at 7:00 anna: the big gamble backfires.

theresa may 's future as prime minister is in the balance. >> more than anything else, the country needs stability. it is, as the indications have shown, if this is correct, the conservative party has won the most seats, and probably the most votes, then it will be incumbent on us to may sure we have that period of stability, and that is exactly what we will do. byn's come back. he says the people of had enough of austerity, and may needs to resign.

i am very proud of the campaign my party has run. our manifesto for the many, not the few, and i am proud of the results coming in all over the country tonight. votingvoting for hope, for hope for the future, and turning their backs on austerity. slips on theg uncertainty now clouding upcoming brexit talks. u.k. futures turn higher. ♪ welcome toy warm the program. i am anna edwards and westminster. manus: i am manus cranny here in the city of london. and a is outside the houses of parliament, where as of yet, the debate will rage as to who will head the next government.

theresa may has blown it. this was an election that she did not need to call. that is the question with markets. over theon, we are all election. in a is at westminster, guy johnson is on the markets, and matt miller is on the trading floor. anna, let's bring it straight to you in westminster. a hung parliament. we have spoken to a number of people who are saying, we could be facing another election. my question is, do you think at this stage, there is any way theresa may can last? it is a question of how long she lasts, that is for sure. we don't know the exact specifics of the selection. looks like the outcome is the conservatives are being supported by the duc.

that is the working assumption that people go on here. does that bring up the coalition, is this some sort of confidence or supply arrangement? we will see how this works out. who will lead the conservative party? has just scraped through holding on to her seat. she has gotten a lot of prominence in this election campaign. but you are right to point out that theresa may did not need to call this election. the whole point was to strengthen her mandate, and she has not done that. she has reduced the number of seats the tories have. the comet from george osborne who said this morning, hard brexit went into the rubbish bin. that is really what we have to debate, isn't it? anna edwards there outside of westminster. let's go to guy johnson. hard brexit in the bin, sir? if you believe that is the

case, may be the pound starts to gain a bit. that is not happening at this point in time. it is still early. london traders are figuring out how to position their books and taking a positive. that is not what we are seeing at the moment. he wanted to trade a market that was going up. exactly the market reaction nobody expected. at the moment, we did not want the hung parliament, that is what the market was signaling. it looks like the pound will soften up on that. my question is, if george osborne is to be believed, does the pound benefit? it has softened up a little bit since the hung parliament has been called by the major british broadcasters. we have had prints low the 1.27 level. don't look at the pound bit,

look at the rest of the screen. nothing else is really happening. i think that is an interesting takeaway. this is a largely isolated story in the u.k. there's a stronger ftse 100. the pound is down, ftse goes up. anddollar revenue streams euro revenue streams go into the big global stocks. european futures are well bid this morning. awant to go back and talk little bit about how the last hour or so has gone. you see this declining bridge pattern here. we have broken out on that. back to this issue about the range of outcomes have now expanded. the details on the range of outcomes have gotten larger. we are seeing bunds just opening up. we are getting the european which will be

interesting with the next guest. into thenother factor mix of what we are watching here. manus: guy johnson with the latest on the markets. here's what they had to say overnight as the results moved in. >> at this time, more than anything else, this country needs a period of stability. if, as the indications have shown, if this is correct that the conservative party has won the most seats and probably the most votes, then it will be weumbent on us to ensure have that period of stability, and that is exactly what we should do. >> this election was called in order for the prime minister to gain a large majority in order to assert her authority. and the election campaign has gone on for the past six weeks. i have traveled the whole country, i have spoken at events and rallies all over the country. and you know what?

politics has changed, and politics is not going back into the box. >> i think one of the issues is that this is a disaster for theresa may. she called the selection unnecessarily. she arrogantly thought she would crush the opposition and win in a landslide. tonight, she has had an absolutely disastrous performance. we have a situation where hopefully politicians may learn that calling referendums and general elections to secure parties rather than serving the country is something to be avoided. this is a moment where we as a party need genuinely to come together and find collective solutions that work for all of us. manus: those of the leaders results as the rolled in. we are now speaking with the finnish prime minister. he said on twitter, it looks like we might need a timeout in

exit negotiations. a time for everyone to regroup. member ofrrent parliament, alexander stubb joins us from helsinki. we are facing a hung parliament here in the united kingdom. that is a fact. is this a worst-case scenario for the leaders of europe as they are waking up this morning? macron along with madame merkel? this is not good news for europe, is it? >> it is not good news for anyone. i think the situation is quite messy. it is complicated, it is not very stable. that is why at think it is time for everyone to regroup. we need to count to 10 and big era out how to take things forward. the burden of proof lies in the u.k. the u.k. needs to sort itself out before your can make a move. you that inuarantee a lot of european capitals, including brussels this morning,

there is a lot of thinking going on, and it will be interesting to see who comes out and says what. i think it will be diplomatic. anna: you say that we need to count to 10, alexander. good morning to you. is a delay possible? are we talking about a situation where the eu could put things on hold? that would send unlikely. is that article 50 has to be text off with a f the end of march, and that means -- ticked off at the end of march, and that means leaders are wary about the european elections in may. that is quite the fixed deadline. never underestimate the capacity of european lawyers to come up with creative solutions. i think the issue of brexit is both for the united kingdom, as we see things unfolding in the past 12 month, and also obviously for the

european union. that is why i think we need to reflect carefully on what is going on. these decisions are being rushed through, including the selection, and it is not doing good for anyone. manus: one of the responses we have heard so far from the former chancellor, george osborne, he said a hard brexit is firmly in. as we look at hung parliament, would you confirm without sentiment, a hard brexit weakens the tory administration and would lead us potentially to a less hard or less aggressive brexit? >> i should probably give a fair warning. i am friends with both george cameron.sborne and i never felt it was strong anyway. cardsk the negotiation are all in the hands of the eu 27 or the european commission,

because at the and of the day you need to decide to things of brexit. one is the date, and the other is the bill that should be footed. that is why i think it was very wrong of theresa may to say that no deal is better than a bad deal. that is an empty threat. it reminds me of child minding. you do not tell a child you will punish them with something they cannot do. if you are driving down the highway and the kid is screaming in the backseat, you don't say i will stop the car and let you out, because the kid is not stupid. you will not do that. will not do that.ot these threats do not work. i think the negotiating hand of the u.k. is weaker, and i agree with george osborne that a hard brexit is now unfortunately less likely than it was 24 hours ago. anna: that is interesting. -- with youris as political experience and looking at the gamble that theresa may

took here. the polls suggested she would win out. has foundy was -- out the answer is something she did not want to hear. a mistake perhaps in hindsight. do you have any words to reflect on the political gamble she took? it was a political gamble, but i would like to emphasize that now we are all in the midst of the selection result, which is messy and complicated and will require a lot of negotiations, this is much more than theresa may. it is much more than one election. it is about brexit, it is about the united kingdom leaving the european union. that is the big picture of this question, and that is why i think we should take it a little bit easy. the truth is, and i know this myself, politicians come and politicians go. democracy survives and decisions are made, but the big decision

that the u.k. has decided and is still reflecting on is brexit, and that is what the selection was all about. the us, it was a tactical mistake, but you need to live with it. stubb,alexander finland's former prime minister, joining us. let's go back to matt miller. jeremy cooke was with us a little bit earlier. he suggested this would be a tough time for euro-sterling and cable. hell is it looking down there -- how is it looking down there? the selling has picked up down here. we moved to a new session this morning, as this trading floor has done a big amount of pound sales. they are moving from real money to algorithms, i am hearing from traders. inple are making these cells

big blocks, and computers are picking up the pieces. as expected, we had a number of people on the program in the last couple of days who said that in the event of a hung parliament, you could see the sterling down as low as 1.20 . i would say that traders are expecting relative markets. they have handled the trades with no problems. is will see how th shapes up today. we called a hung parliament relatively early, and so did many other news media, but we will see more solid results coming out later in the afternoon. matt, thank you very much. sterling work there on the trading floor. studio, the head of u.k. macro rates strategy. great to have you this morning. give us your thoughts. we still do not know exactly what we are looking at here.

what are your thoughts this friday? >> firstly, i think it wasn't what the markets expected. you have been talking about sterling, it is quite a significant reaction, and i think that tells you that a conservative majority is what the markets anticipated. the other thing i think i would say is not just that this is a hung parliament, but when you look at the defeat that all the other parties are projected -- the seats the other parties are projected to win, there are no natural bedfellows back and make up a coalition with the majority. the prospect of a stable government in the u.k. him a under any combination of parties, looks remote for now, and that is a big concern for us. manus: do you think we will have another election within 12 months? she will be a minority government, you suggest? >> somebody will be. i'm at the conservatives or some

other combination of parties potentially, but the conservatives are still comfortably the largest party by more than 50 seats. there are the incumbent government, and i don't suppose for a minute that they contemplate going anywhere. labor will not be able to form a coalition, like the one in 2010 that liberal democrats formed that creates a numerical majority. i don't see that the conservatives can you realistically challenged, but they will be fragile as a minority, -- as a majority. manus: a little bit early er, we said that theresa may would make a speech at 10:00 a.m. now we are hearing there is no 10:00 a.m. speech from theresa may. everyone is on tenderer, hooks o hear from theresa may, and what her plan is. will there be a new beast challenging theresa may? suggest they will be the

minority government. let's take it to the gilt market reaction. ilts, getting ready for the worst-case scenario in their mind. we have a hung parliament, we have a deficit, rebalancing the books. there are domestic issues to deal with in terms of inflation and deficits. but it in a context of fixed income markets for us. >> i think if we look at gilt yields, we have been constructed on gilts for a while. seen that primarily because we are worried about the u.k. economic outlook. that has its prime cause in brexit, but is still playing out in front of us one way or another. the results from the selection, as washand means yes,

being discussed before, the possibility of a less hard strengthened,aps but on the other hand, this will significantly increase already complicated short-term economic problems. weeping confidence will suffer as a result of this political instability we now face -- we think confidence will suffer as a result of this political instability we now face. anna: in terms of the fiscal stance, use it and wait like the rest of us i guess. elections looming does not sound like the signs you will hear from big fiscal changes. we will be in see who is leading this country. >> indeed. is a conservative minority government. they have all sorts of issues they will need to address, but notall, fiscal policy is likely to change. we do not think there's any need for a budget until later this year, assuming they are still the government of the day. but if we are right about the economy becoming weaker, that

spells yet more trouble ahead for public finances. we have to remember that in all of this, the u.k. is running a sizable fiscal decimate -- deficit and that needs to be repaired. any implications for the credit union? any risk in your mind at all to the rating? >> we will watch all the major agencies, and i imagine this will make the more concerned than they already were. let's get across to shery ahn. she is standing by with the first word news. u.k., labour party jeremy -- labour party leader jeremy corbyn calls on theresa may to step down after the snap election leads to a hung parliament. at the start of the campaign seven weeks ago, a conservative landslide was largely expected. >> the prime minister called the election because she wanted a mandate.

mandate she has got has lost conservative seats, lost votes, lost support, and lost confidence. i would have thought that was enough to go, actually, and make way for a government that will be truly representative of all of the people of this country. a hung parliament could see britain moving out of fully functioning government just days before brexit negotiations are due to begin. that could upset the new two-year timetable for finalizing the exit deal. speaking after retaining her theresa mayy seat, called for a period of stability as the country begins negotiations with the eu. in the u.s., fired fbi chief james comey has accused president trump in the white house of lying and if aiming him. after 2.5 hours of testimony, comey says the shifting explanations for his dismissal were "lies, plain and simple.

" of theiremos conversations because he worried the president would paintballs pictures of their conversations. >> the administration chose to defame me and more importantly, the fbi by saying the organization was in disarray. that it was poorly led, that the workforce had lost confidence in its leaders. those were lies, plain and simple. turning to the middle east, donald trump has offered his secretary of state to mediate the standoff between qatar and the saudi led coalition. the announcement came after trump met with rex tillerson and defense secretary jim mattis yesterday. is role tillerson might play complicated by conflicting messages from the administration, including trump's tweets in which he seemed to back saudi arabia over qatar. ron material costs continue to

lead. ago,osts rose from a year just shy of estimates. consumer prices rose 1.5%, matching forecasts. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . ahn, thank you very much. a bit of european reaction now. he is saying that the u.k. vote, he does not read the u.k. vote a rejection of brexit. those are some lines of the reading. we had alexander stubb telling us there could be a case for everyone to regroup, re-think, and maybe draw a breath from the european perspective, as europe seeks to put its political -- off on a surefooted.

when i hear that kind of european response from alexander stubb, i think he is very much a europe doesce where need a moderately stable u.k. to help them. it is not all a one-sided risk. the barometer was windy, and i would suggest the brexit barometer will get more gusty. that is a near-term risk. near-term risk, bang. u.k. economy. haventiment and confidence been fading in the u.k. since the turn of the year. that has been for a variety of reasons. often linked to the uncertainty surrounding the u.k. over what happens in the next couple of years. what did we learn in the next 24 hours? we have another era of significant uncertainty on top of what we are ready had, on what was a stable political backdrop, in terms of having a

majority government, which no somer is, at least under of the scenarios we have seen, and this could go on for a long period of time. for the short term outlook, and one of the reasons sterling has fallen in its initial response to the vote, we see more downside risk to confidence in activity, and great concerns about how the politicians will move forward. anna: i was going to ask you about confidence. but also business. suren thiru, and he said that was a key concern. how do you see them holding up if we have a period of heightened political uncertainty and perhaps further elections? >> an interesting divergence between headline rates for and thoseonfidence

entities that look further forward. i think i would categorize that as saying that for the moment feelrvatives -- consumers ok. but when you look at indicators of economic outlooks for the sharplyr, that slips over several months. it suggests consumers are worried about what lies ahead. as i said before, that seems to be about the brexit process that the u.k. was apparently locked into. that is now thrown up in the air somewhat, but certainly not with the reassuring comfort of a stable political backdrop anymore. we think confidence will go on dating. as realinfect the level earnings continue to squeeze and struggle for the rest of this year. this is certainly not will carney would have wanted. he keeps getting pushed out to the long grass. when d.c. remote possibility of any kind of normalization in the u.k.? >> we have said for a while the

next move is down, not up. the easing is more likely. andhe form of more qe, possibly a small rate hike. -- rate cut. we expect a follow-up from the election will be more weaker activity back home, and they will need to respond with more support. manus: back into the fray. rates -- john wraith, thank you for joining us. the groundrouted to in westminster. let's give you a market check. floor?e a stephen gallo's, line, of war may be created. alexander floor? stubb saying, time for a reprieve, time just take stock

-- time to take stock. this is a british issue, not a global issue. u.k. market open is up next. that is it from me and anna. ♪

♪ guy: welcome back. you are watching out u.k. general election special. the story has been going on throughout the night. i am in london. i am alongside matt miller who was at credit suisse. john sparrow has arrived in the u.k. to walk us through what he is getting in terms of the market reaction. he's going to be joining us to be joining us throughout this conversation as well. we are bringing together some of the best minds we have a bloomberg. we are minutes away from the european mop