Latest / Bloomberg Intelligence / PIIE's Kirkegaard: Brexit Won't Damage Europe Economy (Audio)

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PIIE's Kirkegaard: Brexit Won't Damage Europe Economy (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleventh, Rio to Washington,
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  Speaker 1: d C. Bloomberg to Boston, Bloomberg Well under It, to
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  Speaker 1: San Francisco, Bloomberg nine issue to the country US at
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  Speaker 1: the General one, nine ten, and around the globe the
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  Speaker 1: Bloomberg Radio Plus app and Boomberg Dot Gone. This is
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  Speaker 1: taking stock. I'm Caffeine Hayes. Along with pim Fox. Brexit,
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  Speaker 1: the UK's departure from the European Union has created great
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  Speaker 1: concern at the Bank of England amongst some of England's
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  Speaker 1: top the U case I should say top business leaders,
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  Speaker 1: and certainly even in Europe and the United States. So
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  Speaker 1: why did retail sales pim jump the most into two
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  Speaker 1: thousand two in the UK last month. We're gonna find
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  Speaker 1: out if Brexit is becoming brex ain't brex at all? Right,
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  Speaker 1: well done, We're gonna have to find out more about
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  Speaker 1: the UK economy and its relationship to the Brexit vote.
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  Speaker 1: At first, let's go to Charlie Pellet in the Bloomberg
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  Speaker 1: is from for Bloomberg Business Flat and I thank you,
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  Speaker 1: pim Fox, thank you Kathleen Hayes. And we are brought
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  Speaker 1: e t F. An update for equities. Stocks have been fluctuating,
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  Speaker 1: but with twenty nine minutes to go ahead of the close,
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  Speaker 1: the Dow, the SMP, and NEZTAC all advancing at least
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  Speaker 1: right now. Walmart increasing its annual earnings forecast after second
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  Speaker 1: quarter results topped analysts estimates. Assigned the world's largest retailer
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  Speaker 1: is pulling business away from rivals such as Target. Walmart
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  Speaker 1: shares are up one point six percent. Company also provided
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  Speaker 1: an update on online sales. As we hear from Bloomberg's
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  Speaker 1: Shannon Petty Peace, they just spent three point three billion
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  Speaker 1: dollars for Jet last quarter, which surprised a lot of
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  Speaker 1: people considering jetsas one year old online startup um But
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  Speaker 1: this quarter online sales look good. They were up about
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  Speaker 1: twelve percent. Uh They've been in single digits in the
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  Speaker 1: quarters before then, so a sign that maybe things are improving.
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  Speaker 1: Their sales at Walmart open more than twelve months rose
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  Speaker 1: one point six percent last quarter, which end at July one.
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  Speaker 1: United Commental Holding CEO Oscar Munio's making significant appointments to
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  Speaker 1: have been vacant for a year and replacing a longtime
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  Speaker 1: chief revenue officer. Gold up nine dollars, gaining seven tenths
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  Speaker 1: of one percent, Crewed up two point nine percent, forty
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  Speaker 1: Now we'll look at other news from around the world.
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  Speaker 1: Thank you, Charlie from the Bloomberg News Room. I'm Jill Schneider.
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  Speaker 1: Jeep dealer today. A law enforcement official in Rio de
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  Speaker 1: Janeiro now says to security guards did point guns at
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  Speaker 1: no gun was pointed at them. The change in the
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  Speaker 1: version of events came after police interviewed one of the
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  Speaker 1: There could be some fallout in the shooting death of
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  Speaker 1: The superintendent of the Chicago Police says he will recommend
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  Speaker 1: concluded the officers filed false police reports. Mcwon McDonald died
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  Speaker 1: we thank you, and again recapping SMP five hundred index
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  Speaker 1: up three to five, a gain there of one tenth
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  Speaker 1: of one. I'm Charlie Pellett and that's a bloom Bread
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  Speaker 1: business flash. You're listening to taking Stock with Kathleen Hays
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  Speaker 1: and Pim Fox on Bloomberg Radio. The pound strengthens and
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  Speaker 1: more investors still concerned about Brexit and the UK economy. Well,
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  Speaker 1: let's find out more in the context of retail sales
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  Speaker 1: rising one point four sent in July in the United Kingdom,
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  Speaker 1: that follows a nine tenths of a percent drop in June.
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  Speaker 1: And also seeing that employers are not sending their workers
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  Speaker 1: pink slips in the United Kingdom, they're not making any
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  Speaker 1: sudden decisions to lay off staff. Here to tell us more,
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  Speaker 1: as Jacob Kureguard, he is Senior Fellow Peterson Institute for
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  Speaker 1: International Economics, joining us from Washington, d C. Home of course,
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  Speaker 1: to Bloomberg FM and one oh five point seven h
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  Speaker 1: D two. Jacob, thank you very much for being with
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  Speaker 1: us is other results today? Are the numbers today? Is
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  Speaker 1: it an anomaly or is this something that we can
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  Speaker 1: expect in the future. I wouldn't be it an anomaly,
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  Speaker 1: but it's certainly good news for the UK eclony MEA
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  Speaker 1: mean that they came in I mean retail fields came
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  Speaker 1: in well about consensus. I mean I wouldn't be you know,
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  Speaker 1: too much of the monthly numbers. As you mentioned, there
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  Speaker 1: was a decline in June, the rebound in July. But
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  Speaker 1: it certainly suggests that the vote itself hasn't then said
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  Speaker 1: UK consumer confidence uh, to any great extent, and that
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  Speaker 1: is in the short run in my opinion, as I said,
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  Speaker 1: really good news for the UK comm Can it be sustained?
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  Speaker 1: What does h you we saw the pound jumping on this,
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  Speaker 1: what how is this going to play out now? After
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  Speaker 1: sort of first blush over the next six months to
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  Speaker 1: a year, maybe Mark Karney, Bank and eng then governors
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  Speaker 1: moved to just step up with stimulus reassured people. Well,
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  Speaker 1: that's no doubt that that the proactive manager is taken
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  Speaker 1: by the Bank of England earlier a few weeks ago,
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  Speaker 1: would have that effect in the medium term but I
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  Speaker 1: would also expect the UK fiscal policy to be significantly
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  Speaker 1: eased over the cause of the four months. But I
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  Speaker 1: would still argue that I think the real risk to
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  Speaker 1: the UK economy is not so much a declining consumer
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  Speaker 1: spending in the short comedian term. It's really an investment
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  Speaker 1: driven risk, uh. And it's that the uncertainty associated with
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  Speaker 1: the circumstances a Brexit, I mean, how's it going to unfold,
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  Speaker 1: etcetera is going to be so big and continue to
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  Speaker 1: be so big that you know, businesses are not going
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  Speaker 1: to invest. So the downturn that I continue to believe
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  Speaker 1: occur in the UK economy, it's going to be investment
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  Speaker 1: led rather than consumption leed. Just a little bit more
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  Speaker 1: detail on those retail sales reports, sales of watches and jewelry,
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  Speaker 1: they were up about sixteen and a half percent on
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  Speaker 1: the year. Perhaps that less valuable pound making it less
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  Speaker 1: expensive for overseas shoppers and also making holidays in the
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  Speaker 1: United Kingdom cheaper. That was that will continue want it,
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  Speaker 1: I think that will continue in it. I believe that
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  Speaker 1: the pound, the pound is going to continue to decline
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  Speaker 1: going forward because of uncertainty and because of the declining
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  Speaker 1: appeal of the UK as a destination for foreign direct investment,
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  Speaker 1: and then the fact that it is a country within
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  Speaker 1: very significant current account deficit. And I don't believe that
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  Speaker 1: at the end of the day foreign investors will continue
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  Speaker 1: to finance that at the even at today's exchange, right,
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  Speaker 1: I think the further has the found that further fault.
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  Speaker 1: What's interesting, uh that the European Central Bank, which gave
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  Speaker 1: an account of its July meeting today, agree that their
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  Speaker 1: immediate reaction to the outcome of bregsit should not fuel
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  Speaker 1: excessive speculation about more stimulus. That it was widely shared
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  Speaker 1: um and if it's warranted, they would use all the
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  Speaker 1: instruments that they're within their mandate. But it seems like
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  Speaker 1: are they just waiting and watching or are they saying
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  Speaker 1: they don't think they're that worried about the impact of Brexit,
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  Speaker 1: not only on the UK but on other European economies.
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  Speaker 1: Seems that these European economies could suffer the UK isn't
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  Speaker 1: by their exports. Yeah, I mean, I must say I'm
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  Speaker 1: particularly worried about that. I think the Eurozone economy will
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  Speaker 1: prove quite resilient to a downturn in the UK economy UH,
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  Speaker 1: and I certainly wouldn't expect the ECB to launch any
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  Speaker 1: more monetary stimulus as a response to UH quantity a
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  Speaker 1: sorry to to Brexit. That doesn't mean that the European
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  Speaker 1: Central Bank later this year will not, for instance, choose
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  Speaker 1: to continue or extend its quantitative eating program for other reasons,
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  Speaker 1: but they don't think they will be Brexit related. Jacob
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  Speaker 1: tell us a little bit about the political implications of Brexit.
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  Speaker 1: I mean, you can go back and maybe fifty years ago,
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  Speaker 1: sixty years ago, it wasn't as if the British and
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  Speaker 1: the French were necessarily uh wonderful soul mates on every topic. No,
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  Speaker 1: I mean I think the political the longer political educations
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  Speaker 1: of this vote are really still incredibly on certain um.
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  Speaker 1: I think we now know that the current British government
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  Speaker 1: UH Prime Minister May has said, you know, brexit means brexit,
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  Speaker 1: so they're gonna go for it. But but what does
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  Speaker 1: that concrete melean Does that mean that they want to
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  Speaker 1: clean break from the EU and then negotiate some sort
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  Speaker 1: of free trade agreement. Doesn't mean that they will try
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  Speaker 1: to get a relationship with the EU similar to that
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  Speaker 1: of Norway. For instance, which is sort of a peripheral
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  Speaker 1: semi member of the EU. UH, it's really very very uncertain,
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  Speaker 1: and I think you know that the time it will
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  Speaker 1: take for us to know that is going to be
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  Speaker 1: measured in years, not in months, years and not in months.
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  Speaker 1: So I think Jacob here forgard there's probably a number
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  Speaker 1: of European watchers and UK watchers who agree with you.
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  Speaker 1: Jacob a senior fellow at the Peterson Institute for International Economics.
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  Speaker 1: I'm Catheine Hayes along with PM Fox. This is Bloomberg
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  Speaker 1: coming up on taking stock, retail, Darwinism, its survival of
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