breaking news. the uk votes out of the european union. an historic day here in great print. >> a state of shock. the pound plunging. stocks slammed. bond yields dropping. gold sores. central banks are just beginning to react with the swiss national bank calling for a currency sbvx. we've got the global market reaction covered from start to finish. >> and cameron steps down. the uk prime minister says his country needs fresh leadership after british voters have their say. friday, june 24, 2016 and "worldwide exchange" begins right now.

>> good morning and welcome to a very special edition of "worldwide exchange." we are live in london today. i am sara eisen. it is a new day in the uk. >> it certainly is indeed sara. i'm wilfred frost. a very warm welcome to london from me as well. we are across the river thames on the day that uk voters have backed an exit from the european union. trait to the the market reaction which is severe. >> the center of the storm t british pound plunging overnight to a level we haven't seen since back many 1985. a record fall for the currency. currently trading at 138 wilfred before many people here went to bed last night, the british pound was at 150 on optimism that britain would stay in the

european union. the vote goes the other way and the pound plummet. >> hitting a low this morning of 122.39 a 30 year low. >> records are being shattered across the markets. the euro a record plunge for the currency since its introduction back in 1999. let's show you do euro against the u.s. dollar. 111.23. the concern is this will pressure other european members and will rally the eurosceptics. we'll skeep a close ion that for you. in a massive are ush into safe haven currency likes the dollar and japanese yen. the japanese yen soaring over night. week dollar, stronger yen, stronger gold. >> might be surprised the yen is only down 2.3%.

the reaction in equity markets just as pronounced as currencies. u.s. equities sharply down. the dow called lower around 400 points. the it was down close to 700 points at the lows. at the moment look at the 500 decline. we are expecting sharp declines in u.s. equities. european stocks also down across the board. when i mention the euro is not down as much as the pound look at european equities. italy, ouch, down 11% at the moment. >> asia also closing in the red. the nikkei in japan moving sharply lower overnight. down nearly 8%. the strength of the japanese yen is what hurts the japanese exporters. a reaction there sharply in hong

kong stocks falling 3%. in shanghai relatively stable with stocks closing down 1%. as for the u.s. market action beyond stocks this is cross asset. a rush into safety. as i mentioned bond yields lower as investors storm into the safe haven u.s. treasury. the 10 year note yield now 152. european yields like safe haven german yields also being pushed lower by this massive rush into safety. if you are just waking up as a u.s. investor and looking at this market action, it is sharp. it is confusing. because when crow went to bed last night it looked like the markets were pricing in a stay. the pollsters were pricing a stay. the betting odds were saying more than an 80% chance of stay. >> more than 95% at 10:00 p.m. eastern laos last night. >> a shock. >> extraordinary developments overnight. let's discuss more.

as you said when we went to bed this was not expected. it is the most significant political development in my lifetime. perhaps apart from when the berlin wall came down in 1989. >> and one of the most dramatic 24 hours for the markets. the question that we are going to be asking our guests today, ng-term implications. we are in uncharted territory when it comes to a member coming out of eu. this is the second biggest economy in the eu. what the divorce negotiations are going to look like from here. what it means the u.s. economy and globally. >> already a significant scalp from there this. cameron saying he'll step down. saying the negotiations for the withdrawal should be carried about by a new leader. >> the british people have made a very clear decision to take a different path. and as such, i think the country requires fresh leadership to take it in this direction. i will do everything i can as

prime minister to steady the ship over the coming weeks and months but i do not think it will be right for me to try to be the captain that steer ours country to its next destination. >> so what happens next sara? he said he'll step down but will remain in his post at least three months. he suggested a new leader will be in place by the conservative party conference on the 5th of october 2016 that the process here is we just choose a new leader of his party, the conservative party. and because they have the most seats in parliament, they automatically become prime minister. we are expecting that to be as i said by october. only then can negotiations begin. based on what david cameron said earlier today for britain's withdrawal from the european unib. when they do begin it will be up to the new prime minister to decide if he wants to invoke article 50 to set that two year time period. so britain has not left today.

it's decided to leave. negotiations likely to start once cameron's replacement is picked and then negotiations to take two years. >> and while there is a clearly major reaction and development, this was expected if the vote was going to go the other way. he poured his heart and soul into campaigning for briton stay in the eu. the voters flat out rejected him. the question is who emerges. a lot of people are looking at boris johnson, the former mayor of london. nigel -- >> boris johnson is certainly the big favorite now. it is implausible now that it cob nigel farage because it has to be someone from the conservative part. and someone who has backed leave. that makes boris is the favorite. we should also mention the chance loor george osbourne who one would presume will need to resign as a similar time.

george osbourne a year ago is air apparent is now far down the pecking orders. big developments and david cameron was not expected to resign quite to quick. so that was significant. stocks plunging with some of the largest once including deutsche bank, credit swiss and barclays. j.p. morgan ceo responding and he's made various comments. the prices of those banks on the screen for you now. we've also had statements from goldman sachs, o barclays, rbs and others. the general consensus is one of surprise and shock. and jamie diamond said it could cost 1 to 4,000 jobs in london. so expect at least 1,000 have to have to go. >> and question whether banks

and stay here. all the new negotiations have to be hammered out between brussels and london by whoever succeeds cameron. the city watching very closely and is thought to have voted to remain in to protect their jobs and preserve london being the center of the universe. >> we can come to the implications of that. but for the banks it is a worrying day. do they still may not as you rightly say the position as london as the financial center of europe protecting them are things like the talent pool that exists here the volume of people that exists here to choose from the legal structure against them is the possibility of retaliation from the likes of frankfurt paris, dublin desperate to grab market share. >> response from central banks. the swiss national bank giving a rare confirmation today that it is actually stepped in to intervene in the currency market to weaken the swiss franc. the swiss franc is one of those

favorite safe havens like gold and the japanese yen, getting stronger. the swiss central bank stepped in following the vote to leave the eu. the last time they commented publicly on activity was june of last year amid all the uncertainty over greece's future. certainly the safe hafb franc rising to its highest level --. remember that ocurrence shock? to the euro. january 2015. we've already heard a statement from the bank of england this morning trying to reassure the markets that they are watching. that they have the necessary stools, that they have importantly stress tested the banks and markets for a worse scenario, according to the bank of england and they are prepared to deal with it. >> let's get a further perspective. joining sus jim melon. jim, you were wanting an exit vote. you must be happy.

>> yeah. as the wonderful day. glorious sunshine and i think god is shining on the united kingdom. >> currencies for the pond. for the euro. has the market reacted sufficiently sf. >> i was forecasting 152 on the pound sterling i think we might probe that again around the next couple of days and we'll move back up to 138, 140 which is where it was when boris johnson came in on the side of the leave campaign. i don't really see a lot more volatility in the markets. and the uk companies are 75% export oriented or getting e from overseas. 75 percent to their earnings from over seas and of course they benefit when the pound falls. london is cheap. frankfurt may not be so cheap and i think we're probably in the right balance at the moment. >> you say as the glorious day. it doesn't feel like a glorious day to many in the markets this

morning. there is a lot of fear out there on global wall street. what would you tell investors. >> depends which side youre on. i think it is going to be a short-term shock. if i can put that in the cob text of politics. article 50 as you point out has not yet been a vote. and in my opinion article 50 won't be invoked necessarily. i think britain may negotiate an associate membership of the european union over the next six months to a year without having to invoke article 50. in which case there will be a second referendum. and if the terms are right,ly certainly back that. europe has a lot more to lose by the loss of the uk than probably the uk has in terms of leaving the european union. >> all the rhetoric we've heard from european leaders ahead of this vote and in the campaign period they would treat us very harshly, you don't think that

will in fact be the reality. >> there is talk of punishment. george osbourne saying there is going to be a punishment budget. that is not going to happen under any circumstances. wolf gang schaeuble and others are backtrack nitrogen comments. >> the german finance minister. >> they realize they have to be pragmatic about this. and if you ask me who is going to be the pms it will be michael gove who is by far the most unifying figure in the party. >> do you think osbourne has to fall on his sword like cameron has is this. >> absolutely. he made the stupid mistake of saying if you vote to brexit i'm going to punish you with an austerity budget. he's gone. >> do you think there will be a long term repricing of british assets? british stocks? the pound sterling? is there more than a one day

shock move on the idea that there is going to lot of uncertainty and potentially recession for the uk this year? >> when i was on last week i said to you. >> this week. >> my mistake. i was up all night. when i was on this week i said the pound would be slightly overvalued. so the pound sets around the 140 level or 138 to 140 it is the right level and i think we're going to see a fall off in volatility today and monday and get back to normal. in terms of uk asset, i don't think treasury going to be any change in the fundamental value of the uk economy or companies. >> not what the market is tells. >> the market often gets it wrong. and tell you what the bookies. they lost 3700 million pounds. yesterday you could get 7/1 on brexit. they have got it all wrong. everybody got it wrong basically. and it is back to normal next

week in my opinion. >> the u.s. markets. the dow was down over $7700 pois at one point earlier today. >> i think the machines effecting the u.s. markets the algorithms which take an event and amplify it. and amplify it in both directions to create volatility. the uk is 3% of the world economy. on what basis does that justify a 700 point fall in the dow jones? it doesn't. it is the machines doing it. the machines could easily reverse and next week we could see the dow up 700 points. i have to bet we probe the lows again and then move i up next week. >> the uk may only be 3% of the uk economy but the eu is much bigger chunk and almost the size of the u.s. economy. already you have france calling for a referendum to leave the euro. the fear is this could embolden those political party, heighten political risk and that is certainly an unknown for the global economy.

>> very good point which is why i think the european union is going to move quick to stabilize the situation with a form of associate membrane. denmark, sweden and holland all of whom likely to have referend referendums. and. >> should the -- be lower this morning. >> i don't know. if you think about it germany's currency within the euro is significantly under value but france is over vau. i believe the euro is going to implode over the next three to five years. which way i don't know. but i would say trade the euro between 108 and -- >> are you saying this is the beginning of the end of the euro? >> i've been saying that for a while. i think the euro is gone within three to five years as it axises. it is unsustainable. >> are you headic off to the pub now to celebrate. >> i'm heading to bed actually. >> thank you very much.

historic moment no doubt. the uk voting to leave the eu. the question is how was does that happen? what is the process going forward? our very own julia chatterly has been following that story from brussels. >> good morning. and for all the reasons you were just discussing i can say who knows? there are a number of different avenues but what i can tell you is the ball firmly lies in the uk's court. this is a non binding referendum remember. so the uk government has to come to the europeans and go, okay, this is what we want to do. are we going to invoke as you were just discussing article 50, a separation from the eu, something completely unprecedented? or are 245i going to negotiate another way? and it depends chand what kind of tone these leaders are set to talk in a press conference in the next half hour or so. what kind of tone they take? are they going to be more

implicatery. are they going to go woe that is shock and we need to address this very quickly, particular ily given the concern in the markets or are they going to take a firmer line for the likes of the netherlands, the leader of the freedom party coming out this morning and say we want a referendum. you know, france was going to do the same. so whether they want to play hardball or they also have to go, you know, we recognize this is a problem and a mistake and we need to address it. and the president of the european counsel this morning came out and he said what doesn't kill us makes us stronger. and i think for both the uk here and for the other european nations, the 27 nations without the uk make up the eu they have to hope actually somehow take come out of this strong but the question is how. guys back to you. >> a lot to follow out of

brussels for us. julia chatterly thank you for the update. a quick check e of the british pound which is the mover overnight. earlier hitting lowest levels since 1985. a record fall for the british pound. you are seeing weakness against the dollar, against the japanese yen. even bigger double digit move in percentage terms. these are abnormal moves for the currency market no doubt and we've got the right guest. david bloom joins us at hsbc, welcome. >> thank you very much. >> good to see you. >> this is not a move. this is an adjustment. there is a big difference. the suk one of the biggest -- deficits in the world. the uk has a massive fiscal deficit. what needs to adjust is the kurps. part of the issue of other countries. >> greece, for example, is it doesn't have a currency to adjust. the real economy has to adjust. here is the currency is the adjust mechanism and needs to

fall to a level at which the uk gets investment back again. and i don't think the fall is over. >> earl year this week george sor soros said a big fall was a bad thing for the uk economy do you agree? >> it is not the falling sterling that is the bad thing but the consequences of a decision that we've made. we've got a big decision we've made. a big current account and big fiscal deficit and the currency needs to adjust. and perhaps the domestic demand has to adjust as well. [ ambulance sirens ] >> balance background passing by. were you on the floor last night. >> i am broken. that is the new br words. brexit, broken. yeah i've been up all night it's been very exciting. i'm very lucky to have this job. but the moves have been orderly. that's why nobody expects the

bank of england to step in. because we need the adjustment. it is an adjustment that has to take place and fortunately for us in the uk we've got a currency that can take the slack. but i'm afraid the economy will weaken as well. we just cut our growth numbers as well. >> and forecast for sterling. >> 120 now. >> 120. >> the [inaudible]. >> or 125 by the third quarter and 120 -- unfortunately i hope your last guest is right that everything is just going to be fantastic and normal by next week. but somehow i doubt it. >> what about the euro quick? >> the euro going down and the question is would have been contagion. those who are like our previous guest said the euro [ indiscernible ] hasn't happened and it is always europe's problem. >> which could be the next domino. >> everyone always talks about

the scanned naifbs. but as usual the typical anglo-saxon is we've got a problem. and --. this is a uk issue and the big issue will be contagion but sterling lower, emerging markets lower. risk off. gold is the fantastic winner because we've seen -- >> and the yen. >> but these countries that intervene. you can't intervene in gold. last time i looked at my gold coin, said nothing. >> david thank you. always good to see you. >> can't sbchb in gold. david bloom, a call for 120 on sterling by the end of the year from hsbc. >> the only point i would make about currency is not only where you are seeing the gut reaction and economic expectations of what the vote means, but you can fwhaet this is being closely watched in the c suite. the strong dollar has wreaked all sorts of havoc on corporate profits and that was with the move of a few percentage points per quarter.

when you are seeing moves like this, 3 to 6 percentage points in a session that could cause a lot of damage. >> certainly could. and one sector in particular will be hurting. >> the banks hit hard right now as we're seeing in the trading session. heading into the vote we knew the fall out in a the brexit would be felt throughout the financial industry and it certainly is. kayla tausche joins us from just outside the bank of england with an update. o good morning kayla. >> good morning sara. well the bank of england has said already this morning that it is on standby to help mitigate any of that damage over the medium and long-term, as well as in the immediate. the governor of the bank of england this morning voitsing his conviction and health of the uk financial system as well as instilling confidence that the boe would be on standby to potentially inject capital into it. here is what he said. >> a few months ago, the bank judged that the risks around the referendum were the most significant near term domestic risks to financial stability. to mitigate them, the bank has

put in place extensive contingency plans. and these plans begin with ensuring that the core of our financial system is well capitalized. is liquid and is a strong. this resilience is backed up by the bank of england's liquidity in --. and all of these resources will support orderly market functioning in the dpas of now short-term volatility. >> meanwhile that hasn't really done anything to stanch the losses in the stocks of o some of these banks. for the banks 'part they have come out in force this morning saying they have planned for either outcome for months at this point. they are committed to serving their clients and will do so in as orderly a manner possible. they will work closely with governments over what is expected to be a long transition period to negotiate the new trade agreements with europe and their own businesses really. and that the transition in their

businesses will not be immediate. it will take some time. but of course the banks that are head quartered in germany, in switzerland have taken a much tougher tome. ceo of deutsche bank saying i'm afraid this is not such a good day for europe. at this stage we cannot fully foresee the consequences but there is no doubt they will be negative on all sides. of course we're watching the markets and safe haven pile on and currency swings and a lot o of people we spoke to this morning are expecting spreads will widen and volatility in every single asset class today. will and sara back to you. >> thank you for that. and the banks sector the euro stoxx 600 is down 13% rite. now worst day --. let's get back to the currency debate. joining sus european head of global research at tokyo mitsubishi.

good morning to you. new for joining us. straight up, pound forecast. has it fallen enough? >> no, i don't think so. obviously the knee jerk reaction is perhaps not as bad as some thought. we are at levels similar to where we were in february. so the move has been from a higher level because there was so little risk priced in. we were saying 130 within one month. and i think certainly then if you move forward and we gradually go back to the macro story, i think it is neville that there is going to be a macro hit. there is going to be falling yields initially in response to action from the bank of england. and i think all of that coupled with the broader risk aversion which is there for reasons beyond brexit that i think is going to continue for financing the current account deficit, thinkty pound needs to be weaker so we could easily be in the 120s by the end of year. >> clearly a massive rush for safety across assets region now. particularly exaggerated in the currency market. david bloom of hsbc just said go

for gold because there is no intervention there. what is your favorite safety pick is it. >> i have sympathy with that view. obviously the swiss have been active. i think dollar yen to date had b been too bad but when we went below 100 earlier there was strong buying in japan and he's a pushed up r us back up. so there is that speculation that the japanese authority -- >> what about the u.s. dollar? >> again i think it dpensz depends which currencies but in the em space the dollar i think is going to do well. the flip side of that against the g-10 currencies is the fed is now sidelined for much longer. perhaps 2017 is now a more realistic time frame for when the fed come back in potentially. >> just to interrupt a breaking comment from the ecb who says the ecb will continue to fulfill its responsibilities to ensure price stability and financial stability in the euro area. i don't know if that implies

further easing, further sbvx sbfx. we talked how gold can't do that. i. --. >> yes and of course the flip side of what i was talking about in terms of the courtney account deficit in the suk we have a record current account surplus in europe. as the supportive factor for the euro which means if it goes lower it is going to go more orderly. i do think it will go lower. president draghi this week mentioned the potential for more easing and i think that is in the pipeline now. >> has this unleashed factors that are far too strong for monetary policy to control across the rest of europe? do you think the european union more broadly is under threat? >> yes i think that is going to be an issue for the markets going forward. and there is inevitable speculation and chatter about country whose might follow suit. i think most importantly is how

does the uk respond in terms of the speed in which and incentives and the determination to look more openly to trade keels around the world? and there is a very different profile in terms of what happens to the uk economy if you make su assumptions there is active success in reaching trade deals and the uk economy becoming more open. and i disagree with a lot of assumptions made that productivity is going to drop in the uk. if the uk becomes more open, if there is more trade deals done over -- and i'm talking, yes, maybe a five, ten year period of time. then you could have an argument that the impact, the net macro impact would be a lot less than some were saying. >> -- trying to offer some sort of comfort. we're on top of it. we've got the tools. we can deal with it. you can't help but have flashbacks from 2007, 2008, what happened with the greek crisis and european crisis and the euro crisis. before that here very fresh

still black wednesday in the uk. what sort of crisis feel does this have to you? >> i think it is different. i was looking at the cross-currency basis this morning, which is a measure of the cost of funding to go into u.s. dollars. and yes, going into the u.s. dollar has become more expensive on the back of this vote. but when you do a comparison with the cost of dollar funding from the crisis it is barely registered on the chart. i think the central bank activity -- >> not a panic moment, is that what you are saying? >> absolutely not. and i think the difference particularly in the layman situation is the collapse of lehman's brought about this massive uncertainty about -- [ inaudible ] and i don't think we have that today. i think it is going to be quite different. >> thanks for joining us. wonderful perspective there. we have got so much more to come here on "worldwide exchange." >> keeping an eye on the markets

and on politics. everything is moving fast. the british pound certainly at the heart of the issue, at the heart of the storm. let's check on the pound for you earlier this morning going down do as low as 132. after last night surging to 150 against the u.s. dollar. earlier seeing levels we haven't seen since back in 1985. still nearly 7% fall for this currency as we wait for wall street to open. >> indeed. halfway through thehow let's reset things for you. our top story, of course, breaking overnight the uk has voted out of the european union. an historic day here in great britain. >> a state of shock. the pound plunging. stocks slammed. bond yields dropping. gold is soaring. central banks just beginning to react. the swiss national bank calling for a currency intervention. we've got the global market reaction covered from start to finish. >> cameron steps down. the uk's prime minister says his

country needs fresh leadership after british voters have their say. friday june 24, 2016. >> live from london i'm sara eisen. >> and i'm wilfred frost. very good morning and a warm welcome from me as well. we are across the river thames from the houses of parliament. a brexit vote has happened. the exiters have won. uk voters backing to leave the european union. >> and when we went to bed and when british voters went to bed last night, the markets. the betting odds and the polls all had it wrong. all suggesting that the uk would vote to stay in the eu. the opposite happened by almost 52% of the british population

voting to stay. it was a large turnout despite the rain, correct? >> um-hmm, absolutely. >> and overwhelming win. >> extraordinary developments. totally unexpected. unexpected a year ago. unexpected when the date was set in february. unexpected late last night. the polls coming out yesterday suggested this vote would be remain. of course markets were priced for that. that means the reaction this morning has been severe. let's get to the pound first which is the eye of the storm. we hit a 30 year low of 132, around 5:00 a.m. local time about midnight u.s. time. off the lows now but still down sharply. the pound at 138, off about 5 or 6%. >> and what we've been hearing from strategists and traders on currencies, looking at the euro reaction, the dollar-yen reaction. a rush into safety to buy the yen, u.s. dollar and notingly

this morning. get out of euro. and also which dropped below 110 overnight seeing its biggest fall since the introduction of the common currency back in 1999. what we are hearing is that after a crazy night of 24 hour trading of these currencies it had been orderly. no major problems with liquidity. and what is being done right now is a readjustment. a reevaluation. now that britain has done what was once the unthinkable. a downgrade of the uk growth estimates and recessment of the political risk across europe. >> stocks plunging in reaction to this as well. u.s. equity futures. the dow was down around 700 points earlier. it is now down somewhat less than that. we've got those coming for you now. the dow called lower by about 440. significant moves on all of the u.s. markets.

let's also look at european equity trade where the reaction had been more pronounced in the french and german indices than the uk indices. the ftsi 100 currently down 3 or 4%. germany and france down -- italy really in the eye of the storm. the stoxx 600 across europe. banks getting hit hard. asia, nikkei was hit the hardest as the yen surged. of course that always reacts in opposite directions. >> investors are pouring money into safe haven asset this is morning and that includes u.s. treasuries pushing bond yields lower. we are looking at the 150 region for the 10 year treasury note yield right now. we're also looking at pressure on crude oil as well as commodities continue to get hit. >> let's move on and talk about the political implications of this vote. prime minister david cameron had not been expected to resign as quick as he has.

he is saying that negotiations for a withdrawal from the european union should be carried out but a new leader. >> this is not a decision i've taken lightly but i do billy it is in the national interest to have a period of stability and then the new leadership required. there is noo need for a precise timetable today but in my view we i should aim to have a new prime minister in place by the start of the conservative party conference in october. delivering stability will be important and i will continue in post as prime minister with my cabinet for the next three months. >> striking a very different tone of course this morning was the leader of the uk independence party, niejing farage. >> we are now free to start making our own trade feels and associations with the rest of the world. we've left behind this result.

left behind a failing political union and given ourselves the chance to rejoin the world in a 21st century global economy. so we need as i say a brexit government. we need the negotiations to start as soon as humanly possible. we need to start thinking globally about our future. and the other thing i think that needs to happen is june 23rd needs to become a national bank holiday. and we will call it independence day. thank you. >> huge political implications from this. joining sus tina fordhus is tin. what does it marine for uk's withdrawal? >> i think it is safe to assay

nobody has been quite prepared. but i think and what we've been saying in research is the prime minister with this result has to resign. he has indeed resigned attempt notion he'll stay on until october, i don't think that's politically tenable for him. >> he goes quicker. >> i think he has to go quicker. i think we see an interim leader take over until the party conferences in october and then a new leader of the conservative party would then be elected. >> boris johnson the favorite. will he be the next prime minister? your eyes. >> he's is most likely candidate but i think he'll have competition. >> before we get into wider political risks. as for the market implications david cameron now stepping down that was seen as widely expected if this vote were to go against him. so are there any market effect from that? >> the market has taken comfort i think interest the statement from the prime minister that he'll stick around longer. but as i say i think the politics of that are going to be much more difficult to

implement. the bank of england will be glad about the statement but i suspect in a couple of weeks time we'll see a transition. >> everyone wants to know does this mean other countries across europe follow? what is your take? which countries and votes should we be focused on? >> certainly markets are already asking who's next? for sure this is the biggest and most disruptive incidence of -- risk taken on by a country rather than a geopolitical catastrophe. you have the uk fairs in the near term will impact calculations but just in the first few hours following the announcement of the result you heard suggesting they would call an referendum on irish reunification. we've heard from the freedom party again saying they would propose a renegotiation of their own in a referendum. so referendum risk across the european union has now exploded and even donald trump thinks

this is a great result because what it shows is the so called perceived elite consensus can be beaten. >> so how at citi are you telling investors to deal with the fact that now you have a firm example of voters rejecting the status quo, the political order t postworld war ii global -- >> we've been saying for years tfrs a risk. this is the first time the risk has come to fruition in terms of the voice of the people actually actually over turning. what we say is you can't just look at the polls and betting markets. you need to look at scenarios and focus more on the tail risks and that is what this event has been. >> when does it come to a head for the rest of europe? >> germany and netherlands all in 2017. so they are going to be the

who's next. i think of course we also have to consider italy. everywhere you look people are gravitating towards this notion of taking back control politically. >> you mentioned donald trump moments ago in your take of seeing what's happened here in the uk. is it now more likely we'll see vote for donald trump in the u.s. presidential election? well he'll certainly hope so and his supporters will look to the uk example of overturning this perceived lead consensus as an inspiring one. again looking at the trends at the moment, in fact trump has sunk in the polls compared to hillary clinton. we've got a long time to go. i think from now on vox pop lie risk acute and we have to use more methods and new nuance into thinking about how political tail risks evolve. commentators in the u.s. said trump had no chance of being the nominee. lo and bhoeld he's the presumed

nominee and you can't write off a trump presidency. the stakes are very high. you have two candidates in the u.s. the distance between them from a policy perspective is vast. maybe the biggest in our lifetimes as this event in the uk here has been the biggest political event that i've covered in 20 years. >> and just to zero in on you raising the flag on stuff. human nature how much can you really extrapolate the british voter and put that on the italian voter? hasn't there always been a streak of anti-european feeling sentiment within the uk? >> vox pop lie risk takes on national considerations but has a couple of core elements and one does tend to be populism and anti-establishment and anti-elite sentiment. and with spain coming up on elections on sunday -- not a big issue however you still non

mainstream parties challenging the post dictatorship consensus there. in denmark or other countries immigration is key. in italy, italy has long been one of the more eurosceptic countries. what is curious by the way to point you to data -- the uk was only eighth in terms of its level of euro skepticism. >> and we've see what's happened here. tina fordham pleasure to have you with us. sticking with the geopolitical fall out theme earlier today i caught up with the uk foreign secretary phillip hammond who says this vote will have a major ripple effect. >> i think anyone would have to agree as the seminal change in direction. it will have huge ramifications for britain. and huge ripple effect across the world but it will also have

huge ramifications for the european union. >> the united states regards the european union inevitably as the very important partner. the eu is the only economic bloc in the world larger than the united states itself. and i think the u.s. administration, government, regards britain as a like-minded partner in trying to may not the european union may notes open from&free trade approach to the world. a matter of real regret i think to our partners in the u.s. >> let's get back to the global

market reaction two expert guests joining us now. peter hensman and also mark a. good morning to you both. peter let's start with you. we've seen a big reaction in equity markets. a big reaction in currency markets. if if we look at the u.s. market right now has the reaction been sufficiently priced in do you think this morning. >> >> certainly there's been a very significant short-term reaction. i guess one of these events where we are going to see how this develops over time. as an immediate trading response. then people have to access the longer term implicationes of the switch. we were talking currencies just yesterday. what was it like last night when we saw tpound plunge.

-- that day it fell 4% but then continued down 10%. >> the -- about 12%. given the extraordinary result that was unexpected. i think from here on out it is probable it continues to decline. >> do you think we see ifback of england cut interest rates. >> i think that is unlikely. >> are there implications here for janet yellen and the fed? another interest rate hike off the cards this year. >> we think so. given this is an uncertain event that has added to the challenges in terms of the u.s. economic outlook and more globally. >> you see that in reaction in

u.s. stocks. this is clearly something that impacts the u.s. is it something that tips the global economy into recession? >> i guess we wait and see on that. we're seeing reaction across the world. mr. abe in japan as suggested he sees a need for intervention in markets because of the volatility and that can follow through into the economic problems. so it is certainly a more difficult environment than it was before the vote. >> mark, the german, french, italian equity indices off much more than the uk equity index. why is the our --. >> [ inaudible ]. has not only impacted the united kingdom but also for the --. there is concern the euro will weaken against the dollar which is the safe haven in this

environment. >> we have seen statements from the european central bank saying they are here. do investors have faith in those central banks? do these statements provide comfort and relief. >> i think so. certainly we're going to see eases money for longer. as you said we've had a rally from the -- and some stability perhaps coming in this morning. >> peter you are the chief strategist at the $50 billion asset management firm. what are you telling the portfolio managers this morning? is this a buying opportunity? >> certainly we're looking for where things have become over sold. there are specific opportunities that come about in these circumstances and very often the immediate reaction is larger than you think is jufd. justified.stified.

justified. the europe stoxx banks index was down 13%. are banks over reacting to this? >> i guess we're slightly more cautious on the banking sector. we still think there is potential for more adjustment to come there and our concern is very much this kind of policies we've been using post crisis aren't the ones to solve the challenges we've got. so more cheap money doesn't solve --. >> thank you very much both for joining us this morning. pleasure to have you with us. >> if you are just waking up. breaking this morning, the uk voting to leave the european union. >> i still can't believe it. >> it is shocking. >> i still cannot believe it. >> it is shocking. we were sitting here how many hours ago talking how the markets were pricing out that risk. the betting odds. pricing out the risk. even the polls showing a substantial lead for the remain camp. >> not just on the 24 hour time

frame or 12 hour time frame. on any time frame i look back on. three months ago, one year or my whole lifetime, this is unbelievable the development. and also of course it has led to the resignation of prime minister david cameron. he's going stay in his post for a thank you months and step down. let's get a sense of what is left to come on cnbc sate side. >> this has seismic implications and going to be felt around the globe. we are going to be looking at all the different arenas feeling the aftereffects and shocks on this. starting with politics. we do have some continuing follow-ups that are happening. some pressers we are going to be tabing live. boris johnson the head of the leave campaign will be doing a press conference at 6:00 a.m. and we'll be taking that live. also expecting that hear from donald trump in scotland this

morning. he'll be doing a press conference as well and we'll be listening in on that. we know this is a situation that again will impact all sorts of areas of the globe. we are going to be talking this morning to enrico ledda the former prime minister of italy and give us what he thinks. here on "squawk box" we'll be gets the first reaction from the fed as well. 8:30 erastern we'll hear from teledallas fed president. and more. and more.

thank you becky. let's get to the latest from bank of england governor mark carney speaking this morning. >> inevitably there will be a period of uncertainty and adjustment following this result but as the prime minister said just this morning, there will be no initial change in the way our people can travel, in the way our goods can move or in the way our services can be sold. and it will take some time for the united kingdom to establish new relationships with europe and the rest of the world so some volatility can be expected as the process unfolds but we are well prepared for this. >> joining us now is simon derek, chief strategist somewhere and another guy. good morning both of you. simon, head of --.

what are the flows this morning? has the pound further to fall? >> i think you would be foolish not the believe there is more space. but in fairness it's -- actually been pretty positive. and my guess is that actually we need to start looking elsewhere. start to think about actually where the next dominos start to fall. i think it is interesting the euro has come into a agree degree of pressure and interesting european stock markets suffered more than the uk stock market. i think that interesting. >> there is no playbook here. we have not seen anything like this. so what sort of historical references, charts are you looking at to see how much farther we could fall for markets, for the british pound? and what advice you would with giving to investors. >> in terms of levels if you want back to think we traded the euro against the sterling up

above 90 cents after the crisis in 2009, i don't think we'll g get that. economically this is not as bad as the post lehman environment. looikz 1985 sterling traded down to 105 against the dollar. we don't need to go there. you had 15% rates and all sorts of things going on in the united states then. really probably end up in the 120s -- >> when crow say this town is going to be okay explain that. going into the vote there were all sorts of doomsday scenarios what would happen to the british economy, as the financial center if they vote out. >> i would still expect that we will see a slowdown in growth. growth over the next five years will average about half a percent less than i would have thought it was had we not done this. so let's pencil in something, a

number with a one in front of it. not a two. and lowish one possibly on average for five years. that is what i mean by this isn't the end of the world in that sense economically. but what we have got and what currency people look at endlessly. we have years of uncertainty as we try to untangle ourselves from the european union. and that is just going to weigh gradually on the pound in particular. >> simon, you spoke of possible domino effect. slould the euro have reacted as much as the pound today? >> that is where the uncertainty is. it was noticeable this morning. we'll hear something out of five star in italy. all have expressed their eu and euro skepticism quite public eely over the course of the last few years. and clearly there's been a rising tide of calls for

referenda. having the uk now voting to leave it opens up the way for those nations to start pushing. and the difference is we're not in the euro. they are. >> -- next brexit point -- >> all sorts -- >> can i just ask what your clienting have been saying today? off the back they bid up the pound. clearly the market was expecting a result the other way. have some of your clients lost a fortune overnight? >> i don't know. i have to say i had more conversations with people yesterday saying what is the market doing?

>> i think you have to put it in that context and now the people are waking up so the bigger financial cost is from all of these people who couldn't hedge their exposures from the impact. from weaker global trade or whatever. that is going to be where people lose money. >> we're gonna have to wrap it up. only a minute left on the show. your end of year forecast for sterling? >> for sterling, something this year probably just around 130 for sterling against the there are a. and euro dollar something like 106. somewhere down there. >> [ inaudible ]

>> yes it does indeed. simon derrick. thank you so much for joining us. and what an extraordinary 12 hours it's been. >> and an extraordinary next 12 hours as the markets react. let's show you where we are after what's been quite the dramatic overnight session here in london. the dow futures indicated to open lower by 500 points. believe it or not that is not the worst levels of the session. at one point futures were down about 700 points. we've come off the lows. the s&p 500 futures were down as much as 5% earlier this morning. again, the gut reaction selling out of stocks. buying treasuries. the 10 year treasury note hit 140 overnight. we've come back from there. we're in the 150s so a little relief but still the gut is negative across markets we wait for central banks we wait for company reactions and of course we wait for the political

response. >> indeed. we certainly do. sterling of course hit a 30 year low at 132. back up to 138. european equity market down sharply. continue nebl europe down more than the uk. that is it for "worldwide exchange" spegs edition from london. "squawk box" is next. good morning. it is the vote heard around the world. the uk's decision to leave the european union shocking markets. stocks plummeting. the british pound hitleing 30 year low and of course gold spiking on the news. it is up 50 dollars last i looked. david cameron is out. plus reaction from a weakened german chancellor angela merkel: and donald trump landing in scotland this morning, he's expected to speak shortly. it is friday, june 24, 2016. throw away all your newspapers

because they are old. "squawk box" begins right now. >> live from new york where business never sleeps, this is "squawk box." goornl everyone. i'm becky quick with joe kernen and andrew ross sorkin. if you are just waking up you better buckle your seat belts. the united kingdom shocking the global markets voting to leave the european union. that vote came down 52-48 in favorite of leaving. david cameron already announcing earlier this morning he'll resign in october. let's get you kaupgt on the markets. >> u.s. equity futures right now looks like the dow is indicated to open down almost 500 points. believe it or not that is improvement we're off the lows of the session. s&p futures down by 73. the nasdaq down by 152 because the market were not prepared by