GlobalReach's Mulhall: 'Leave' Camp Could Be Unprepared (Audio)

Word breaking news desk for today's afternoon call. Here he is Bill Maloney. Good afternoons. Shrilly stocks plunge around the world following that Briggs and vote and like you said, MANUS averages are on session lows. Dallas currently down six hundred and thirty four points, Sesspes drop seventy eight and NAZAC falls two hundred and eight points. The NAZAC colhard

dropped back below the two engine day moving average. Over in Europe, Spain and Italy plummeted twelve percent well, the UK dropped three point two percent and the pound fell as much as eleven percent. Back in the US, A small cap six hundred down twenty seven points and the US ten yield at one point five eight percent. All ten as B sectors are lower, led by losses and financials, Materials,

and technology. Dow Transports plunge three d and fifty seven points, and as A five Tech sank a hundred and thirty two points, and the vix is hired by forty four percent. In the Dow, Goman Sacks fell seven point four percent, Jping Morgan seven percent, and Caterpillar six point three percent. Verizon and Walmart were a little changed. New My Mining gained five point two percent and made a rally in the minors, while money manager Investco plunge as much as

thirteen point two percent. That's in motions. August of eleven, Live from the First Breaking news desk gon Bill Maloney Charlotte allright, hey, thank you very much, Bill Maloney worth repeating SMP five hundred index down seventy nine, a drop there of three point eight percent of to hear live breaking news over your Bloomberg type squawk on your terminal vans squ a w K. I'm Charlie Pelotar Brexit coverage continues.

That's a Bloomberg business flash. You're listening to, are taking Stuff with Kathleen Hay and Pim Fox on Bloomberg Radio, continuing coverage of the United Kingdom's decision to leave the European Union. Northern Ireland's Deputy First Minister, Martin McGuinness, has called for a border pole on a United Ireland. This, of course, after the UK voted to leave the EU. Support for the European Union considerably higher in Northern Ireland

than in the rest of the United Kingdom. Here to tell us more, Karen Mohaal, Chief investment Officer, Global Reach Securities, joining us from Dublin, Ireland. Karen, thanks very much for being with us, first of all your reaction to the vote and tell us is there going to be a United Ireland as a result? Um? Good evening him speaking again.

I I it's an interesting one. It's it's kind of come out a little bit out of a left field and in the nature of the makeup of of how maybe last night kind of panned out in the sense that London the kind of scent center of the kind of financial market elements of the UK economy, and and Scotland and Northern Ireland were the three kind of only

the only three areas that were strong Remain votes. And so you know, in the in the last few hours you've had a lot of pressure amongst well, you know, certainly within Scotland and to some extent, I know I saw Mark mcginnison's comments today. I'm not sure if they they were a little bit tongue in cheek, but certainly some pressure coming on what role the kind of regions will play in in in and in a broader UK

economy that's outside of of Europe. And certainly say Northern irdn would be a net beneficiary of inflows from from Europe. They would get an awful lot of structural structural moneys as well as money. Correct it's called peace money, the financial support from the European Union. Yes, absolutely, And and Nordon Irens is the only region within the UK and that is actually a net beneficiary from from from Europe.

And so it's quite a big deal. And and and the Northern while then in the Republic, our economy has been has been going reasonably robustly over the last two or three years. Nordon Arden it's still reasonably slow growth, kind of dynamic and they would they would certainly not want to lose any help that Europe would provide them at the moment, and so and that's probably I guess where Martin McGinnis is coming from in terms of maybe

looking for a normal IREN vote. They're trying to find a mechanism that would keep them within within europe state. They've obviously voted, they they voted, they were strong remain in last night's referendum. So Karen, earlier we had on the show of Marian Harkins, member of the EU Parliament, a former member of Ireland's parliament, and uh, she like our uh John Nichols Waite, our editor in chief for Bloomberg Editorial. They've basically said, how this house this is

in a way, how kind of distressing this is? And of course I'm wondering. Then we can see what the mood in the markets is. We can see that. You look at European stocks, you know, Uh, the smallest loss ironically is in the foot See you've got the IBEX down and the foot well, actually, excuse me, when hundred is down three percent, the foot ce m ib is down twelve and a half percent. You have you know in Italy, yes, Italy, and the IBEX in in Spain, thank you sir. And of course Uh. Anyway, the mood

is sell in Ireland, in Dublin, in your firm. What is the mood mood among people about this moment? Well, I don't think it. Very many people would have predicted this cutting and I guess that's the it's it's the kind of the broad sense of I don't. I think shock is probably a little bit of a kind of a strong word because you know, the referendum, the polls were always we're always reasonably tice and I think probably the in terms of the markets themselves, the important dynamic

to understand is SOT. At this time last week, we were we weren't a whole lot of way from the color levels that we are now, certainly on European equity markets, certainly where the docks and the French cat closed, and it was within the range that we had been in the last couple of weeks. But what we did see was Friday, Monday, Tuesday this week a significant rally seven eight percent higher on the basis that remain had taken

back the lead in terms of the polls. So you know, the sell off has been very aggressive, it has been um in in a very short period of time. In reality, we've kind of only moved back to the levels that

we would have seen last week. Where we go from here, though, I think it's going to be very interesting because possibly, unlike maybe some of the worries we've had in the last couple of years, whether it be China or you know, your US procession or or you know, issues around a bowl of from from and this is going to be a very slow moving story. And there's going to be you know, a couple of catalysts in the next week or so, but after that it's delightly to die into

the background for a couple of years. But kind of that level of uncertainty is going to remain and how and and we're going to see it sort of piecemeal drip drip drip as the UK tries to find a way to maneuver themselves out of Europe but also keep their keep their trade deals, et cetera, maybe in place. Jared Muhall is chief investment officer Dublin based Global Reach Securities. He says this issue of the UK, which could play out over a couple of years, will kind of fade

in the background to the markets. I'm wondering though, if there'll be headline risk was such an important global event. This is taking stock on Kathleen Hayes and Pim Fox on Bloomberg Radio, Bloomberg. Taking stock is brought you by your tri State BMW centers. Visit them online at try State, BMW dot com. At BMW they only make one thing,

the ultimate driving machine. Broadcasting live to New York, Bloomberg eleventh to Washington, d C, bloom to Boston, Bluemberg, well Under to San Francisco, Bloomberg nine to the Country series at JAM one and around the globe the Bloomberg Radio plus DApp and Bloomberg dot Com. This is taking stock. Coming up on taking stock, We're gonna take stock of the pound sterling, the British currency now down more than eight and a quarter percent at one thirty six fifty two.

Find out will Mark Karney and the Bank of England have to intercede in order to maintain the value of the pound. That's next, also Pim, what should you buy? What should you keep selling? It's a very important question. That's We're going to continue our conversation with Karen Mulhall, chief investment officer at Dublin Blaced Global Reach Securities Charlotte Pillets back. Charlie Pillett is in our New York newsroom

with Bloomberg Business Flash, Thank you very much. Kathleen Hayes pim Fox fast moving markets after that historic Brexit vote in the United Kingdom. Here's where we stand. We've got twenty nine minutes to go ahead of the clothes on this Friday. SMP five hundred nicks down seventy seven points. That's a drop of three point seven percent. The SMP now at two thousand, thirty six down. Industrials down six hundred nineteen points to drop there of three point four percent.

That now at seventeen thousand, three hundred ninety two. Nasdaq is down two hundred six points to forty seven oh three, a drop there of four point two percent. Sterling right now is at one thirty six fifty six. We've got gold surging of fifty nine dollars the ounce to twelve thirteen twenty two on gold. That is a game of four point seven percent. So equity is sinking to session lows.

The victory of the lead campaign stunning many investors. Michael Cogino is the president at the Permanent Portfolio family of funds. And in the coming months and years, Great Britain is gonna have to negotiate with the European Union as to how to exit whatever deals it has currently and enter into new deals as well as deals with other countries outside the European Union for trade deals that could be

positive or negative. We just don't know already. Immediate impact on corporations British airways owner i a G lowering its two thousand sixteen profit targets, an oil tumbling along with most commodities. West Texas is going to be the crew down five dropping to one barrel on w T I now at sixty brand down four point nine percent. It is three thirty two on Wall Street. Now, let's take a look at other news from around the world. Thank you,

Charlie from the Bloomberg Newsroom. I'm Jill Schneider. President Obama says he has spoken to British Prime Minister David Cameron and is confident the UK is committed to an orderly transition out of the European Union. Mr Obama spoke this afternoon at Stanford University. I do think that yesterday's vote speaks to the ongoing changes and challenges that are raised by globalization. But while the UK's relationship with the EU will change, one thing that will not change is the

special relationship that exists between our two nations. The President had urged Britain to remain with the European Union. Donald Trump is hailing Britain's vote to leave the EU and predicting that other nations will follow suit. Hillary Clinton says we need to respect the choice the United Kingdom has made. British Prime Minister David Cameron is resigning in the wake of yesterday's vote. Cameron says he worked hard to stop the vote from passing, but failed. I held nothing back.

I was absolutely clear about my belief that Britain is stronger, safer and better off inside the European Union, and I made clear the referendum was about this and this alone, not the future of any single politician, including myself. Cameron says he will leave office knowing he did what he could. President Obama is designating the Stone Wall in Here in New York as a national monument, the first to honor

gay rights. The tavern in Greenwich Village became the site of an uprising after police raided it in June nine, triggering what is widely viewed as the start of the gay rights movement. Global News twenty four hours a day, powered by more than hundred journalists and analysts in more

than one hundred twenty countries. From the Bloomberg News Room, I'm Jill Schneider and this is Bloomberg Charlie, and we thank you, and again recapping equities Laura across the board, six hundred point drop in the down Jones Industrial Average, down three point three tenure yield one point five seven. Our Brexit coverage continues. I'm Charlie Pellett and that's a Bloomberg Business flash. This he's taking stuff with Kathleen Hayes

and Pim Fox on Bloomberg Radio. A global sell off in global assessets on speculation, the UK decision to leave you hamper worldwide growth. We certainly con see it in the numbers. Is Charlie Pellett just so eloquently laid it out for us. We're continuing our conversation now with Karen will Hall's chief investment officer at Global Reach Securities in Dublin, Ireland.

So certainly someone who is in the heart of the impact and all the big questions about where this leads next and of course for you here and this is such an important investment question because in your work at Global Reach Securities you invest mainly in stock indices or sectors through e t f s. You mostly have an international, a global macro focus. Let's start there. Pam was just mentioning how much the pound has fallen at the lowest level since is that where you start? Do you start

with currencies? Do you look at this rally in uh, you know, government bond markets, particularly the US that seems

to be continuing. What's your first step, I think, Cavin, when when we're still of looking at how our investment process that involved of and and kind of takes into account events like what we saw in the last twenty four hours, I think for the first thing, we kind of try and come back to what the double central banks are doing M and the certainly for the moment it will involve evolve over time, but for the moment, we were very focused on Mario dragging and what the

use to be are doing. UM and we've spoken about this before, but the kind of the natural flow of that is that we would see the euro being on average weak currency, so we would look to both allocay capital away from the Europe, from the Euro to currencies

that we think with strengthened against the Euro. And then within Europe, we've had had a recently um strong focused on to the European corporate bonds and we have stayed away from from European sovereign bonds valuations they're a little bit strained, but particularly European corporate bonds, some high yield corporate debt, and some European equities based around the German market. We've we've had over the last six months and very

its positions in Sterling against the Euro. We have very small exposure to Sterling at the moment with within the fund, mostly due to the uncertainty around what we've seen in the the last twenty four hours, and I can't I I see probably some opportunity for Sterling to to weaken a little bit further, and we certainly wouldn't be trying to buy and buy the difference sterling just yet, and we'd want to see a catalyst that turn it around, because as I think a couple of the other guests have

already mentioned today that the UK is in a bit of a difficult spot in the sense that Karnie probably would quite like to cut rates and sort of give a bit of an indication of a of a of action into sort of, you know, improve confidence. But you know, if the if sterling is weakened so much already, and if it was the weaken materially more, it will lead to a huge problem with the important inflation. And the UK economy is very susceptible to important inflation and we

saw that in the eleven and twenty twelve periods. So I would suspect if Cornie does decide to do anything, it's going to be more around maybe quantity of easy or liquidity as it measures, and at that point we might get more interested in in in terms of maybe

taking some Sterling exposure and with within our investment process. Karen, I just want to follow up on something you're talking about having to do with the catalyst for a turnaround at that point, won't everybody know that there's that catalyst? And isn't this when real money is made, You look at things that no one else wants to buy because

they believe that the situation will not change. Well, pin things can get cheaper, I guess, is what I'd always said to that, and I think even in terms of the clodity sell off we've seen over the last couple of years, and I've always been it's not that we would be necessarily be waiting for the turn, but I certainly think in terms of getting excited about about Sterling again, and you know there's there's some chance and and certainly some technical analysis that one of our team is Don't

has done with suggested Sterling certainly against the daughter mightn't have a whole lot more downside to go. I think you'd have to, you'd have to let a bull the days go before you you decided to to really move in there. And yeah, and as I say, you'd be looking for something on the even on the fringes. It might not have to be a direct catalyst, but something on the fringes to suggest that the selling of of

of Stirling has at least debated for a period. So over the long run, where how do you see this working out? And does it really make that much difference in some sense when all of a sudden and five years down the road for investors like you people have

to manage money. Is it just is it? Is it going to all settle down and we'll be where we were, or does it have some lasting effect that we should be worried about what it's going to have a lasting effect on the growth look for the UK economy and the Leave camp have argued that's very strongly that the short term negative catalyst that we're sort of seeing begin to play out now we'll be offset by a longer term improvement in terms of trade deals, etcetera. And we'll

have to see how that kind of works out. But for me, I guess um go in forward, it's not whether or not it has a lasting impact, it's how more how as I spoken maybe before the break, is how does the houses sort of play out? Does it kind of and it's probably not going to happen in the next week or so, but does it fade back into the background and then kind of re emerge as they were kind of a risk off move and then

kind of go back and then re emerge again. And that's why I was quite interested to see Bars Johnson's comments and this morning, who has been the sort of main figurehead of the Leave camp. And you know, it occurs to me that maybe the Leave camp maybe weren't that confidence in their own success. And I'm not sure they have their own plan in place about how to proceed from here. Thank you very much for spending time with the Skier. And Mohall is chief investment officer for

Global Reach Securities. They are based in Dublin, Ireland. The pound sterling right now down more than eight percent against the US dollar at one thirty six seventy four. You're listening to Bloomberg Radio. Coming up on Bloomberg Radio, Russelle balancing could be having a Brexit LNE like effect on US stocks too. We're going to find out why, what it means for the market's next on Bloomberg Radio.