tv Bloomberg Markets Bloomberg June 24, 2016 3:00pm-4:01pm EDT
vote, the u.k. decides to leave union.opean stocks him are globally, a massive selloff in europe. >> the latest reaction from .russels the u.k. and the eu starts the process to go their separate ways. and the conservative party starts to think about its next leader. focus on the u.s. market. the closing is coming up. >> i am watching the numbers into back toward the session lows. let's take a look at where we stand. across the board, more than 3% down. we are on pace for the biggest weekly fall in the past five months. earlier, we did hit session lows and we are inching back to where
that was. let's take a look. flipped to the negative territory. we are now just above that on the other side of the flatlined but the nasdaq is in negative territory. the dow is up only about .01%. let's go to the imap function. financials accelerating losses nearlyw on the order of 5%. this is its biggest fall in the past half year. materials down. information technology also down. utilities still up about a third of a percent there but that is because of interest rates. i also went to flipped over to another function in the bloomberg terminal.
the folks at volatility across sectors and financials being the biggest drop but we can also see the biggest volumes are highest 150%rms of financials, up against the two day moving average. telecommunications is up about 130% and industrials up by about 90%. let's died deeper into what is deeperng with -- dive into what's happening with financials. about 9%.down jpmorgan, its lowest in about 1.5 months. morgan stanley earlier was down by more than 10% and has pulled back. moven stanley starting to staff to dublin in frankfurt and goldman sachs is down. let's see what is happening also in the dow in terms of biggest losers therefore that we are
taking a look at what's happening with industrials and arrows ace. caterpillar seeing session lows right now. caterpillar on track for its the past ninen months. pastgan is estimating exposure to the u.k. is about 5% in terms of sales and ibm seeing its lowest in a month. dent growth. let's first take a look at volatility. haven. spurring the safe about a 45% jump or so. from yesterday's close, we have that about 17 and we are about 24. this jump is its biggest in the
past 10 months or so. gold is jumping higher. this is headed for its highest close in the past two years. let's take a look at the u.s. 10 falling.d it was as low as a 1.4% and is still down 17 basis points. >> let me bring you what is happening globally. equity markets closing for the biggest one-day loss 2008. germany off by 6.82%. that is where the pain was felt more acutely. spanish, biggest one-day losses on record. switch up the board, here's the action in the fx market. 30 year low.
just amazing moves in this market. the strongest story. what is the boj do next? that is an open question. final board we go. just look at the spread and tension between spain and germany. the spread right now blowing out. yields down in germany, -14 basis points, up in spain. the political risk goes into the weekend. markets intot the the headlines with mark crumpton. mark: president obama says he's confident britain is committed to an orderly exit from the european union. i do not to promote summit, the president commented on the
referendum. president obama: i do think yesterday's vote speaks to the ongoing changes and challenges raised by globalization but while the uk's relationship with the eu will change, one thing that will not change is the special relationship tween are nations. remain one of our indispensable partners. mark: the president said he primeby phone with minister david cameron who today announced his resignation effective in three months. donald trump did not waste time finding a connection between britain's decision to leave the eu and president obama. from who arrived in scotland -- trump who arrived in scotland told reporters today some of them were cast despite the president. i think that a lot of
if he had not- said it, i think the result might have been different. >> clinton's campaign is: mr. trump's reaction dangerous and frightening. russian leaders are speaking out on the historic decision. president vladimir putin says it is in the kremlin's position. government with support from other european union members is hoping to offer constructive trade block exit negotiations that conclude unassociated partner status for the united kingdom.
global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. the brexitction to vote has been pouring in. havee live in berlin with a german government is preparing for the u.k. departure from the european union. what has been the reaction so are from german leaders? >> one of shock and concern. were sticking with leaders and foreign policy and they said overall, a catastrophe for germany and the eu. is thencellor merkel leader of germany, a balancing act. on one side, there is the desire to punish the united kingdom, to prevent anyone else calling referendums and the domino effect that is feared of.
we have the right-wing parties from france and spain desiring not referendum and the leader of france talking about a rush through to try to get this deal done and to immediately start with preparations for an exit but she has been the voice of reason. she already realizes the other side of the balancing act, the business side. she once to support the business side and ensure the economy progresses best it can. covering this. what can we expect to come out of the meeting monday? >> monday, she has someone her counterparts in france and italy. and the head of the eu. he has the president and said remember those incredible words he said if we did indeed see the u.k. leave the eu, it could spell the end of western
political civilization itself but those leaders will gather together and they want to decide how they will leave the eu to be cohesive and prevent any domino effect, any concerns. there is much to look at and we get the foreign policy ministers flying and germany has some of the other five. we will expect to see the foreign ministers from france, belgium, luxembourg, italy, the netherlands. bonnie: want to ask you whether reaction from regular germans on the street today was if you manage to get out at all. >> everyone in the office had in no way anticipated this.
and we see eu flags being held up across germany. we saw the use of the green party demonstrating. behind me, this is a famous square in germany and they have been there saying the eu is better together. the feeling is one of shock and dismay. you.e: thank much more breaking news, coverage of the brexit vote, and the aftermath just ahead. ♪
markets." a quick check on the markets. we have seen a decline today and it is a gathering seen as we approach the last half hour of trading in about 15 minutes. the s&p 500 down three point 6%, a drop of 75 points. the dow down 3.4%. and the nasdaq is down more than 4%. some cross assets, most of the green on this green in spreads because german bond yields declined and spreads widened. hadgerman 10 year yield been as low as minus seven basis points today. crude at -- down 5%.
47 59. i think across the assets, you see some stabilization. we did see much more of a decline when it came to currencies and the volatility index, which is up to 25 now. the dollar yen, 102.29. when you look at the major indexes here in the u.s. come all of them are in negative color tour year to date. about the down now down on year.
our top story, the brexit vote raising many questions about the future of the european union. joining us from boston is carmen reinhart. she joins us from boston. you have talked a lot about contagion. look at the contagion from this decision, how far out the you see it going? has a this contagion also tale of the remaining uncertainties. the vote is over but uncertainty as to internal within the u.k., what will happen in terms of cameron's replacement, the scottish referendum, and x terminal as regard to how other process thehe eu brexit. there is a lot of room for an extended contagion.
is not being resolved quickly. therefore, this is not over. bonnie: you are the author of many books and papers and dissertations but the one we think of this time, it's different. are there precedents here for a country leading a large union, a 500 million person union, and creating new trade negotiations in short order? no, not that i am aware of. -- i will notea your comment on short order. i think the idea that has been sold, it is a relatively seamless process to move out of one set of trading partners and into a new set of trading arrangements that is seamless is naïve. about you have written
the surprise factor. what was the surprise factor here? , oneuld have gone this way of two ways. how big of a surprise factor was there here? the surprisek factor was still there. as i noted in my new york times piece, the surprise factor had diminished after polls that of the showed leave vote was gaining ground. night'sw from last historic flood on the pound, it was clearly not fully priced. i think that the other key element of fast and furious contagion has to do with financial linkages and here of course, the u.k. has a very broad network.
elements for adverse surprises is still very much alive. in thed of swing we saw british pound, especially last night. i think we will be learning more about what some of those negative surprises could be. thank you. brexit coverage of the vote continues. next, we talked to the bloomberg editor-in-chief. ♪
jonathan ferro. let's take a look at the major indexes. the dow down about three point 5%. the s&p 500 down 3.7%. and looking at the nasdaq, down 4.2%. the big story, the brexit vote. joining us, john micklethwait. i wanted to ask you to respond to something we heard earlier today. how do you see this playing out politically over the next few weeks? within the u.k.? guest: i think he will immediately have the scots saying we voted remain. all of us across the district voted to remain and we want to stay in this thing. and the next phase you have got is all of these european elections. we have the spanish over this
weekend, the italian, the irish. there will be a host of other people. and at the top, you have angela merkel alarmed. it's always about finding some sort of compromise. they won't forget the outcome of referendums and elections. stronger now that the u.k. has presented a challenge? guest: it has to be. at least half of what britain was saying that this thing doesn't work and people like george osborne, he has always
made the same point, he has always said you should integrate because you want to have a single currency, you must have a common banking union, some kind of transfer system. you could argue the logical consequence of europe not getting its act together. not trying to blame the europeans for what britain has done. but fundamentally, he was making a strong point and somewhere angela merkel might be prepared to suddenly think about the different ways of pushing this thing together stance.ith a very clear >> we have had many conversations globally about the rise of nationalism. we have to spend a bit more
attention to the dissolution to left given that many of the votes to left were in labor heartland's in north of the country. just using the u.s. as an example, it's not just donald trump, it's the far left as well . do think we need to spend more time talking about it? do.t: i think we that is a continual issue at the moment. you saw it from tony blair. you could well hear it from hillary. you have this stance on the left class loyalties around the working class, around the people who were supposed to sit behind the main screen, that they are causing problems. the basic fact is fundamentally, labor voters in industrial towns are over weld to get out of the thing. well be true of
hillary versus donald trump. big industrial states, people might say i'm fed up and easiest way to hit the experts in the various people like that is to go for this end as long as he left isn't getting any traction, and already you see questions about the james corbyn. he has resolutely failed to connect. david: thank you so much. john micklethwait, editor-in-chief of bloomberg news. bonnie: still ahead, coverage of brexit continues. aheade a look at what is for the netted kingdom after the vote and special coverage all weekend on bloomberg tv and radio. ♪
>> and i'm jonathan ferro in the heart of city of london after a historic day in the united kingdom. i will head straight to wes beenter where francine has standing by. the political ramifications will take years to play out. we do know is the fragmentation within the u.k. has already begun. >> scotland is making a lot of noise. we heard it from the first minister of scotland. vote.nd did a decisive they don't want to lose out membership for the eu so she hinted at the fact that could be a referendum. whether it will come to a second referendum or whether they will wait a bit is quite unclear. if you think about it, they have nothing to gain in rushing through because this will play out for months and years.
we don't really know what the u.k. will negotiate with the eu. they will see if they get a deal and go from there. much of: i didn't hear hostility between the lead campaign and the european leaders. i wonder what you make of the tone at the moment. do you think moore is happening to hide close doors? when you hear these guys work -- talk and public, they say they will still work together. do you think it's more hostile behind closed doors? >> i think it is. hethe press conference, certainly seems to want things to move along quickly because he doesn't want the eu to be in limbo. it's a little like a game of chess. these people saying let's go for a second referendum.
and others saying maybe boris can become prime minister. others say i don't want to withetely renegotiate trade deals. everything at the moment is up in the air. people are taking stock at what is happening and they want to try to get the best possible outcome, which is maybe why it's more subdued than that divisive campaign. ahead to just looking next year, french elections, german elections on the horizon, is the pressure on the european leaders to get this done as soon as possible as opposed to the u.k. government who may be leading it? >> one of the other things we leaders say is maybe the eu will try to negotiate with the u.k. quite quickly so other countries won't call a referendum. what we do know is other more
extreme politicians and central europe say things like maybe we should call a referendum. that is dangerous but maybe people in europe are also saying look at what the u.k. voted for and would in case of referendum turnout more en masse to get their voice heard. only 72% of the people in this country voted. put in a fight for the country to remain. , the result may be different if more people had turned out to vote, the results may have been different. jonathan: thank you very much for joining us. the politics uncertain, the market move decisive. was continue to check the headlines and get across to mark crumpton. : european union leaders say
the 27 other member states will continue despite britain's decision to leave the block. the eu assembly will hold an recession twos day or a vote is expected to top and agenda ahead of a summit of leaders in brussels. the result of the referendum means u.k. and eu officials will be rewriting a new set of for trade. international military -- monetary fund managing director discussed the need for a smooth transition. >> we need to explore all options. : she is the first minister of scotland. likecots saying they would a second referendum to be held on whether or not they could stay in the european union. 48 of the brexit vote goes
on the leeds side winning that. the prime minister of britain today announcing he would resign and that would be effective in three months. britain's eu exit could cost jeremy corbyn his job. those seeking his removal say he failed to galvanize party supporters to reject brexit. he said he has no plans to step down. the uk's historic vote is dominating the conversation online and global headlines. google reporting record spikes for searches in britain for getting an irish passport. search interest in the british pound is also at its highest level ever. some 6.4 million tweets were sent in the u.k. since the polls opened thursday until today. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries.
i'm mark crumpton. alix: the u.s. stock market around 25. abigail doolittle is standing. abigail: we are looking at a fixed at law for the nasdaq with the index is down about 4%. near session lows. its worst decline in about five years and stop ready significant. also on pace for its weekly decline. nasdaq'sue to the leading to technology, the biggest drag including apple, amazon, microsoft. also the travel related stocks including priceline, american and biotech is down sharply. we have the biotech index down 4.7% of this point. 38% from the peak
last year. we take a look at the two year index.f the biotech we see there was a strong correlation until february. at that point, the biotech index stays lower perhaps suggesting the market is a signal of what could be ahead for the nasdaq overall. scarlet: thank you so much. alix: we want to get more insight on market reaction. samantha, global market strategist at j.p. morgan. the market really bringing out positions here. how much more down id think is left? guest: it's important to see where we came from. leading up to the vote, while investors have taken precautions, there was a misplaced confidence that we would see a remain vote so with the onset of the leave vote,
this is a normal response given the fact the market is reacting to a very significant policy change. joe: there so many variables people will be watching over the coming weeks from how europe handles this, whether it will be movement,dependence to how the u.k. and how long it takes negotiations. how do you begin to think about the risk to the market with such an open-ended issue? guest: i think you really have to look at financial conditions. this is especially relevant for u.s. investors. while the fed watches financial conditions like hawks. the way the exit impact will influence us in the u.s. will be through the tightening of financial conditions. we know the primary way that happens is through the exchange rate mechanisms. as investors pour into the u.s. dollar, we expect that to see tightening here for them -- here.
jonathan: the ipaqs having its worst day ever, spreads open wide. ?oes that continue not so much sterling. it is just the arrow. -- the euro. what: it's hard to look at the markets have done just for today. investors are still digesting the outcome. we have a lot to see over the next week. another factor to look at is the fact the yen has strengthened dramatically and that has implications to what the bank of japan does. a lot of movement right now. we need to he a central banks will do to support the market and bolster policy to soften the blow. ubs had a no doubt saying , that could be as
much as $90 billion in selling. they just have to chase the prices. i've heard a lot of people describe this as a fundamentally political issue. at one -- what point does it become an economic issue? guest: the impact on the financial markets is for the most part going to be through the sentiment perspective. if we get confidence weighed on for a significant time because of this note, because of the uncertainty, we would expect it to not be fantastic for risk assets of it as an investor, there are ways to buffer against this. you could move toward quality. equities today are down half as much as european equities and that has to do with proximity away from britain but you can move up the quality spectrum by looking up the u.s. joe: you mention you expect
to be the main driver but there are real-world impacts, especially in europe and the u.k. specifically. you could see less investment taking place. talk a little about these real economic ramifications and how that could impact the market. david: the headline here is we don't know what a post eu bruton will look like and we need some clarity from policymakers. i think the linchpin of this is we need to figure out what kind of trade agreement, what deals britain can negotiate. there are examples with the u.k. and canada, the u.k. and switzerland and norway. before we know that, it is hard analysis.ario is this what might happen if donald trump elected president in the u.s.? guest: it's hard to say.
it's obviously a very unconventional election cycle. we like to remind our clients that what candidates say they can do and what they are able to implement, there is a large disconnect. we try not to be too tactical. down 564 points, slightly positive for the year. the s&p 500 negative for the year. what do you do monday morning? guest: what we are advising clients to do is look on the and keep intrum mind the brexit vote shouldn't change the worldview of what we see in the u.s. economy, which is a continued sustained flow expansion, which does bode well for u.s. equities. alix: so calm. thank you so much.
union. the biggest one-day drops on record. stocks and the u.s. also much lower. let's cross over. around 2030ading here on a key reversal day. you had short-term momentum weakening globally. joining us now for a technical perspective is katie stockton capital.s from btig how much technical damage was done today to the s&p? but i a could be worse think it will get worse before it's over. this pullback is really a washout. it should be very swift. that is how these things tend to unfold. you get emotions running high, volume starts to pick up, you see sentiment go from an extreme greed level yesterday to
hopefully the opposite of that with an even days if not the next couple of weeks. joe: what do you make of the fact we are getting this selloff right as it looks like we are about to hit record highs once again? it seems like multiple times since last may, we have come this close to breaking through and we can't do it. news right got this at this moment, what does that say about the prospects of breaking through? identifiedhave resistance and that is whether our potential sellers for the market. significant tory resistance. mindful of that. we know the market really needs to see a pickup in momentum to get through that and when you see beyond the s&p 500, you a lot of downtrends. even if the s&p does clear that
level, this could be a step toward a tradable low. today, you have the rebalancing as well. how does that change things, how does that alter the positioning we see today? guest: it really just enhances what we see in terms of volume and emotions. the volatility has picked up recently. we saw a couple weeks ago the breakout. vicks that gave way to another breakout. our call has been for the vick's to reach that before the washout runs its course and we are there yet but we are closer to it with today's actions. inx: we did see a big jump the vicksburg nowhere near the levels we saw in 2008. what does the chart show you? guest: it is a breakout from the trading range. it does have additional upside
from the resistance level and that is one of those measures we call a market internal measure. we find these measures really useful in terms of trying to determine when a tradable low is at hand. when we are trying to identify that tradable low, we look for extremes also in the other market internals. what will we need to see monday to get a gap higher? will it be higher? guest: it will probably take a whole lot based on the intentions we have seen today would be very abrupt. we had an outside down day and are likely to have that on today's close. those days we tend to see
you can see the huge jump we have had today. this redline delineates that sling. we haven't really seen a big breakout swing like that since march or february this year. joe: that is an extorted very chart. you see charts like this today all over the place. , the pound. you see these up and down lines, the likes of which we haven't seen in a really long time. scarlet: which makes you wonder if the gains we saw there will persist. alix: good point. i have a chart of the vicks. to 26 early this morning but we are down i about 23. the more interesting chart to me the maxed out chart of vicks. we are down at 23, nowhere near 2015 in august. the idea that we have had
volatility but let's put that volatility into perspective. jonathan: if you want -- i would bring up cable one. the day of the vote going into it, all-time high. unbelievable surge. sky rocketing. i think to your point on the equity side in the u.s. come it was due but in the fx market. alix: thanks have seen a lot of movement also. s&p financials thing is biggest decline since 2011. morgan stanley, jp morgan. scarlet: let's take a look at the rates market as well. this is our rate trader function. i have picked the united states look at on and i can the benchmarks, across the yield
curve. this is the short end and this is the long end. what you are seeing there is the intensity of the move based on this historical information. the spread is tightening because we see the negative numbers. how many standard deviations question were what you see here in the bottom right is the index. you can go to it as well. what you see here is this spike. that shows a severe point of in the u.s. market when the headline had crossed. there were about the confusion over what would happen and this the european market open for trading. it: interesting to see reflected like that. i'm looking at one area where there is some stress. you may have missed this if you want looking at polish or hungarian credit.
both of these spreads were surging today. with the u.k. thing, it throws all kinds of questions into the future of the eu and these countries on the periphery, their future is much more in doubt. to keep inmething mind in the coming days. that does it for this hour of "bloomberg markets." of how u.s.ms stocks are getting ready to close out the session. the s&p off by more than three point 25% and the nasdaq has its biggest one-day loss since 2011 all-star this is "bloomberg markets." ♪
the sunsets on a volatile week on british markets as britain votes to leave the european union. >> there is the closing bell. alex: global markets buckled. we have to market -- kick it off with our market minute. the s&p lost almost $30 billion. indices losing more than 3%. the nasdaq is down 5%. this is the worst one-day selloff for stock since august 24. nine out of 10 groups declined. the exception was utilities. at one: morgan stanley point down 10%. that they are moving jobs.