Trevor, Multiasset London Royal London, Fifteen Percent discussed on Bloomberg Daybreak: Europe

Automatic TRANSCRIPT

Trevor greet them is head of multiasset london royal london asset management joins me now on the green outside the british houses of parliament trevor very good to have you with us this morning as we all here in westminster let's start with a question about the uk in terms of your thinking how have the recent developments over the past twenty four hours change your expectations on brexit's we spoke to one investment vanguard who said that a okay the central scenario hasn't changed but the tail risks have increased a totally agree with that i think people always underestimated the size of the tail risks and there are terrorists in both directions in terms of the impact on sterling so i'd say roughly john's something like maize compromised deal get through parliament gets through the tory party gets gets through the eu twenty seven the other twothirds details so i think the risk no not at all exit have increased quite markedly dominic robb is a very sort of extreme brexit here now in charge of that department and it's very late so it's quite possible we end up having a kind of chaotic departure from the eu and theresa may's now sort of threatening other european leaders that they have to get their act in order to avoid this as if it's their fault i think the more likely it becomes that we leave with no deal so ever the bigger the opposition to that will become in parliament in the country and so the other tail the other one third is that there's either a deferral of article fifty to give the uk more time which pretty have to happen under a different prime minister or there's another referendum johnson was talking about the need to prepare for for no brexit for hard brexit wasn't he yeah trevor kid have you with us when you talk about those two tail risks it just says he's very simply to the point global markets aren't interested at the moment in what's happening with brexit that's the feeling that i get from interviewing people in singapore in hong kong here in dubai there's no interest in brexit it's not a systemic event as it was on the day that we voted to leave that's the trees when's it become a market risk oh i know it matters i know what matters doc it's our underpricing underpricing the cataclysmic risk of it goes to the extremes yeah newton a note deal exit it will be sort of ripping trade trade relationships apart with nothing really to replace them so i think that would be a global risk event in the same with the original referendum vote was but sterling's were really matters and that's obviously a global currency you mentioned sterling is pretty much unmoved at the moment but to me i think it's unnaturally calm if you look at sterling euro it's been unnaturally calm for year they've been all sorts things happening in the economy's an interest rates and monetary policy and instead flat it feels like a currency peg gonna break one way or the other way and i think with the new deal exit break would starting with weakened by ten or fifteen percent if we were to have a second referendum and not go through with brexit sterling could rally ten percent fifteen percent so it's an unnatural calm because the currency traders don't know which way to jump jump in yeah it is it is it is it that binary fee trevor it could be that extreme fifteen percent on the tyneside so crashing through the lows of brexit and flash crash i think so yes i think it would be a very very i'm assuming that scenario we're talking about a disorderly exit these things to happen some people describe what's happening is slow motion car crash that sort of sped up recently but time is is running out so it's plausible to the packers down just plausible that it could actually recover if his pricing in some probability of a big drop and that probabilities removed it will go up and this has become a big impact on global portfolios particularly sterling baseball folios where i think you need to make sure you you're hedging your bets between domestic asset classes like sterling commercial property at equities which more global and making sure that if you're a more cautious minded investor based in the sterling zone you've got most of your assets true sterling exposures.

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