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00:00SOVEREIGN RATINGS FOR S & P GLOBAL RATINGS. THANKS FOR JOINING US. WHEN IT CAME TO THIS DECISION TO HOLD SNAP ELECTIONS IN JUNE, MARKETS INTERPRETED THAT. >> I THINK THAT IS RIGHT. COMMENTATORS SAY THAT THEY ARE DOING WELL IN THE POLLS. IT IS STILL TRYING TO GAIN MORE SEATS. MORE IMPORTANTLY, MAYBE, THE FACT THAT WITHIN THE GOVERNING PARTY, DIFFERENT THOUGHTS ABOUT BREXIT HAPPENED, SHE'S GONE FROM WHAT WE CAN SEE TO A LITTLE MORE PRAGMATIC GROUP THAT SHE LEADS. I THINK SHE IS ALSO TRYING TO ACTUALLY EXPAND THE IMPORTANCE OF THIS GROUP WITHIN THE CONSERVATIVE PARTY AND GET MORE FLEXIBILITY TO ACTUALLY MAKE COMPROMISES. FROM THIS IS WHAT WE WANT, IT'S CERTAINLY NOT GOING TO WORK. IT'S REALLY THE BACKGROUND THAT SHE TRIES TO STRENGTHEN. IT HAS NO CLEAR PRO-EUROPEAN POSITION TO BEGIN WITH. IN PARTICULAR, THERE ARE MORE HARD-LINERS IN HER OWN PARTY. OLIVER: WHEN YOU LOOK AT WHAT HAPPENED YESTERDAY, THE BRITISH POUND HAD A PRETTY BIG MOVE. THEY VIEW BREXIT AS BEING SOMETHING THAT WAS TRIGGERED AND NOW WE KNOW THE TRAJECTORY. IF WHAT HAPPENED YESTERDAY INDICATES THAT PERHAPS THERE IS STILL SORT OF SLACK TO BE HAD IN TERMS OF THE EXPECTATIONS OF THE EFFECT OF BREXIT, HOW DO YOU ASSESS THE SOVEREIGN RATING WHEN IT APPEARS THAT IT'S NOT JUST A SIMPLE SIGN IT AND LET'S MOVE ON? >> IT IS SO COMPLICATED, NOTHING OF THAT SCALE HAS EVER BEEN ATTEMPTED IN SUCH A SHORT TIME FRAME. WHAT IS CRITICAL IS THAT IT CAN BE AGREED UPON. IT CAN LEAD TO A DETACHED RELATIONSHIP BECAUSE IT IS NOT ONLY TRADE. WE TALK ABOUT TRADE BUT THAT IS THE EASIEST PART TO SOLVE. WITH EUROPE AND THE U.K. IN PARTICULAR, AND ALSO ALL SORTS OF OTHER ISSUES FROM AIR TRAFFIC TO EDUCATION AND UNIVERSITIES. A MERRY OF THINGS THAT NEED TO BE SOLVED. YOU NEED TIME FOR THAT. WITH THIS ELECTION IN THE BAG, SHE MIGHT HAVE A BETTER POSITION TO DO SO. THERE WILL BE GREAT UNCERTAINTY AND IT WILL BE DIFFICULT FOR MARKETS PRICED. THERE IS NO PRECEDENT WHICH YOU CAN COMPARE IT WITH. SCARLET: LET'S MOVE TO THE UNITED STATES. WE WILL BE BUMPING AGAINST THE DEBT CEILING. ARE YOU CONCERNED WE WILL SEE A REPEAT OF 2011? A SHOWDOWN ALONG THOSE LINES? IS THE BAR HIGHER OR LOWER THIS TIME AROUND? >> IN 2011, WE LOWERED AROUND THAT EPISODE. OBVIOUSLY, THERE WAS NO CASH CRUNCH. IT WAS JUST A POLITICAL CONFLICT THAT COULDN'T BE RESOLVED. THE CURRENT RATING IS A STABLE OUTLOOK. WE WOULD ASSUME THAT IT IS DOABLE IN THE SUMMER TO JUMP OVER THAT BAR. IT SHOULD BE PRETTY LOW. IN PARTICULAR, SINCE WE DON'T HAVE THE DIVISION OF POWER BETWEEN CONGRESS AND THE WHITE HOUSE, SURELY THE ADMINISTRATION AND CONGRESS ARE NOT ALWAYS LOOKING I TO I. IT WOULD BE SURPRISING IF THEY LET IT COME TO THIS. WE EXPECT THIS TO BE RESOLVED. THIS WOULD BE AN EASIER TASK THAN IT WAS IN 2011. OLIVER: MARKETS REACTED STRONGLY IN 2011. WHAT DID YOU LEARN FROM THAT AND HOW ARE YOU APPLYING THAT THIS TIME AROUND? >> THE REACTION ON THE MARKET AT THE TIME, AS YOU REMEMBER AND KEPT REMINDING ME IN PREVIOUS INTERVIEWS WAS THAT, AS YOU KNOW, THE BOND RALLIED. WHICH IS TOTALLY EXPECTED. BASICALLY, THE MONEY WILL FLOW TO THE ASSET THAT IS THE SAFEST. THE U.S. TREASURY WHETHER IT IS AAA ARE AA+. INVESTORS ALSO TAKE THE VIEW THAT WE SHOULDN'T HAVE A REPEAT OF 2011. THAT IS WHY YOU SEE THE TREASURY IS BEHAVING. IT THERE IS NO INDICATION OF PANIC OR ANYTHING LIKE THAT. SCARLET: DO YOU AGREE THAT POLITICAL RISK IS STARTING TO APPEAR IN A MATERIAL WAY IN THESE DEVELOPED MARKETS OF WAY THAT THEY WERE IN EMERGING MARKETS? >> I THINK THAT IS THE CASE. IF YOU LOOK AT THE RATING ACTIONS, THE U.S., THE U.K., AND THE EUROZONE. MUCH OF THIS WAS NOT JUST BASED ON FUNDAMENTALS, BUT IT PLAYED A ROLE IN SOME INSTANCES. REALLY WHAT WE THOUGHT WAS THE POLITICAL INSTITUTIONAL ENVIRONMENT AND STRUCTURES THAT MAKE PREDICTIVE POLICIES LESS CERTAIN THAN THEY USED TO BE. THERE IS GREAT UNCERTAINTY. AND THIS IS A REFLECTION OF THE DEEPER DIVISIONS IN SOCIETY THAT WILL MAKE COALITION BUILDING HARDER TO IMPLEMENT.

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S&P's Kraemer Weighs in on Brexit, U.S. Budget and EM

Moritz Kraemer, S&P Global Ratings chief sovereign ratings officer, discusses the U.K.'s credit outlook amid Brexit, the possibility of a U.S. federal government shutdown and emerging markets with Bloomberg's Scarlet Fu and Oliver Renick on "Bloomberg Markets." (Source: Bloomberg)

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