The Brexit vote coverage on Bloomberg Radio Brexit Latest, Paul suggests that perhaps the Remain vote has just barely edged out the Leave vote. In fact, Nicholas Frost, who has been one of the leading voices saying that UK should exit the European Union, is conceding that it looks like the vote to remain is just barely winning the day. Well Mark Chandler joins us now here on taking stock on Bloomberg Radio. He's global head of currency strategy at
Brown Brothers. Haraman. So, Mark, I guess at the very least we can figure if if it's just if this is overheading, that the pound sterling, which has already had a pretty good move higher, should continue to do so, Daniel, I think, Kathleen, that would be the sort of the knee jerk reaction in the sense that the British looked very close to coining the polls and then the very last minute, like what Winston Churchill said about Americans once, he said, you can always kind of America to do
the right thing after they've exhausted the alternatives, and so here the UK last minute, they're gonna do the right thing. It looks like but I want to say that the market, and I'm pricing this in for about a week now. Sterling last Thursday was treading almost at one point four zero against the dollar, and just now we tested one point five. This is a very large move and I think this is I try to make a distinction between fast money, the leverage community hedge fund speculators in the
futures market. These people have been already buying sterling and by when the slow money, which are the people who are managing our pension funds, retirement money. We want them to be taking considered views. We wanted them to take off risk ahead of this great unknown, and so they will be slower to return into the markets than these
hedge funds and these leverage community people. Mark Chandler, what if you could tell me a little bit about the yen in the context of the EU referendum in Britain, Because the end is dropping right now as describe a haven demand declines down about the half a percent. Yeah, you know, DA mean, I think you're right. You know, I think people like media have underestimated for how long the referendum has been hanging over the market's head. This is one of the factors that if the uncertainty, it
seems to be one of the factors they encouraged. This is a great strength of the yen, and now it's being unwound. So the dollar and the yen are both weakening against all the major currencies and all the emerging market currencies. Well, if you're Mr Corona, governor of the Bank in Japan, you're very happy to see this, right. And of course central banks were uh letting us know that they were ready to step into currency markets if
the Brexit vote passed, the pound got hammered. If the end serves so, I guess they can just all sit back now and you know, have their dinner or go to bed. Mark. Uh. Where does this leave if the if the if the Brexit vote is defeated, Uh, then is it just a repricing back to uh where we were before bregg really heated up. I think it was
in some ways Keting right. To beyond that, I think that the for example, the Setial Reserve has stided the Directxit as one of the things leading to the international uncertainty, and they would if I had to make a like a little like a list of the stactors, they would get the settle reserve to move sooner rather than later. I'd say a rote with the UK stays in the EU and the global capital markets UH, do not go,
do not become unstable, especially on the downside. It seems like officials like us with the investors, we prefer volatility upside rather than the downside. One consequence is federal reserve policy. You want you imagine that you want volatility to move to the upside, all right, Well, you get people more excited and interested in in in trading. Um. One person I imagine who was interested, of course in the results
is Prime Minister David Cameron. Didn't he try to change and to some extent he did change the rules for UK United Kingdom's membership in the European Union, for example things having to do with migrant welfare payments, but also UH protection for the City of London, the financial services industry. I think that the best thing that the UK has done for this financial service industry is to if this is the case, to vote inside to stay in in
the EU. I think that the for me, I think that there's still going to be a circle problem for Cameron. He had thought that the left in London was going to dream the Tory Party back together, but instead just
thinking about the tone and the Uh. It seems to me that zal the Tory Party apart and it won't surprise me then as Cameron faces a leadership challenge still later this year, and Osborne, who has delivered a budget that was quickly rejected and then came up with like a gap budget in case of Blexit, I think he might end up leaving, having to leave the champ of Exchequer, which is sort of like the U S. Treasury Secretary.
So I still think that the politics in the UK not resolved, and the market is probably gonna have to overshoot now and this aren't really going to be good levels for to be chasing the market, I think in terms of this move, uh, the yen um, you know, pulling back from the highs, the dollar rising, Will this continue? Will because the dollar keep rising absent another industrate increase in the FED, I think? So I think that's the global market stabilized. I think one of the pressures on
the yen, you know. I look at the capital flows and it's interesting. Uh. Bloomberg tracks the weekly data from the Ministry of Finance and last week that is the data that came out earlier today in the US would be Thursday. Uh, I'm sorry, yeah, Thursday morning in the US, the Japanese recorded for the first week since the end of March, foreigners did not buy Japanese bonds and and so I look at these flows, and so where's this big demand from end coming from. It's not only the
portfolio flows. Yeah, speculators are long end, but it's not really it's not really inside it really would move the spot market necessarily. It seems to me that the Japanese themselves repatriating, So was the profits and dividends or hedgings. I saw one essiment that suggested that Japanese companies can have as much as UH five hundreds a billion dollars in overseas earnings a B thanks very much, Mark Chandler,
Global head of Currency Strategy of Brown Brothers Harriman. More coverage of Brexit continues