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UK Parliament to Meet for First Session Following Brexit Vote; Brexit Political Fallout Continues; Hillary Clinton Talks about Brexit; Iraqi General Says Fallujah Recaptured from ISIS; Pope Francis Says Catholic Church Should Apologize for Treatment of Gays. Aired 3- 4a ET

Aired June 27, 2016 - 03:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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[03:00:00] MAX FOSTER, CNN NEWSROOM SHOW HOST: You are watching CNN's special coverage of the U.K.'s decision to leave the European Union. I'm Max Foster in London.

ROSEMARY CHURCH, CNN NEWSROOM SHOW HOST: (AUDIO GAP) Church at CNN Center. Welcome to our viewers in the U.S. and all around the world.

FOSTER: Now the U.K. Parliament set to meet for the first time here since that Brexit vote. And all of the political fallout since the country's leadership is in disarray.

Prime Minister David Cameron which in a meeting with his cabinet after saying he would resign on Friday and as a revolt within the opposition Labour Party as well after losing the Brexit campaign.

Half of Jeremy Corbyn's shadow cabinet has resigned with one senior M.P. fired for reportedly passing a coup.

But Corbyn is refusing to step down. The U.K.'s finance minister, meanwhile in the last hour, George Osborne speaking hoping to smooth things over in the international markets.

(BEGIN VIDEO CLIP)

GEORGE OSBORNE, EXCHEQUER CHANCELLOR: He will not be plain sailing in the...

(END VIDEO CLIP)

FOSTER: We'll bring you that a bit later on that he is effectively saying we will continue and stabilize the economy so this market won't fall. They are just opening. So, we are watching that very closely for you.

Osborne made that statement less an hour ago. So, it's not clear if it will have all the intended calming effect. Here's a look at the Asian Pacific markets, though.

The European ones as I said are just opening, so we're waiting for those figures to come through and we can't bring you the Asian ones but they were volatile. Let's just say that. They won't -- there was not a big capitulation that some people were worrying about.

Here to help us sort out the numbers, our Nina Dos Santos on London's trading, as we also Andrew Stevens in Hong Kong. Andrew, while Nina is digesting the numbers as they come in just tell us Asia about this.

ANDREW STEVENS, CNN ASIA-PACIFIC EDITOR: Yes. We just saw the numbers that are briefly popping up, Max. Yes, a much, much common day here and the big market to watch in Asia today was Japan. The Nikkei down 8 percent in reaction to the Brexit on Friday. Up today 2.4 percent.

Now one of the main reasons that the Nikkei was so badly hit was the fact that the yen soared in the aftermath of that Brexit vote because the yen is the same as the safe haven currency. And when all the other markets were plunging people were putting their money into the -- parking their money in the yen. And a high yen is bad for corporates especially if they export. So, the Nikkei fell sharply.

Now today, we saw the Japanese Prime Minister, Shinzo Abe, met with the central, the key Central Bank players in Japan and they said -- or the message, they said, is we are watching the yen very closely. We are not going to let it get too strong. As you see there it's now trading still getting a bit stronger about a third of 1 percent.

But certainly nothing like we saw on Friday. So, the central authorities stand ready to act. And that was a calming influence on the markets in Japan, on the markets around here in Asia, also taking stock on what today, Max, after big falls on Friday really waiting to see what's next.

And we can't say that the uncertainty is in any shape or form being cleared even a little bit. But certainly, it's now more of a wait and see here in Asia.

FOSTER: You've got the numbers yet, it's only three minutes in to trading, but as they come in what are you expecting?

NINA DOS SANTOS, CNN CORRESPPONDENT: Yes. What we are seeing here, Max, is the FTSE 100 is down about 8/10 of 1 percent, but nowhere near by as much as people are expecting this market. So, the big catalyst to that has been the very reassuring statement that are coming from the U.K. chancellor of the exchequer.

Now I've just been listening in to the morning meeting here at Panmure Gold which is the trading floor I've been broadcasting too from this morning. And what they are saying based on what Osborne said the last half hour or so, is they are putting forward their expectations for a budget to be announced by the U.K. chancellor probably in the fall.

So, we are talking about October, September time here. And that budget instead of being punishing budget here that could fill black holes in the U.K.'s finances. What is likely to be stimulus and want to try to cushion the blow.

They are saying nevertheless, where the U.K. does goes forward and that invoke Article 50, we are talking about bracing yourselves for a technical recession in the last course of the year and the pound could fall to around about 1.20 against the U.S. dollar by the third quarter of the year.

[03:05:02] Why is that significant? We'll take a look at the pound. It has tumbled out to bed over the last one a half trading sessions. On Friday, in the early hours of the morning it was going up as high as 1.50 against the U.S. dollar before plummeting back when they go about that sharp vote.

And as you can see it is currently trading at 1.34. Some people saying this currency could fall to as low as 1.20. And then some bright spots here. We are talking about gold which has risen around about 1/8 of 1 percent in Friday's session. People here are saying, well, it does have room to appreciate further.

You're seeing that on the market you're seeing gold stocks and the FTSE rise and you're also seeing the commodity itself rise. Currently price at 1,330.50 on the troy ounce but people here across this trading floor is saying 1400 is close on quote "almost a certainty from here."

And politically, well, that's a bit that causing all the uncertainty across these markets. People across trading floors like are giving potentially up for a potential election in the first quarter of next year. The kind of uncertainty that will keep markets on their toes. That happens between now and then, though, is something it's very difficult to trade, very difficult to predict, Max?

FOSTER: Andrew, just back to you briefly, as I was reading about a Chinese official saying that effectively all investment in the U.K. is on hold until they work what's going on, in the building behind you, relaly what's happening in the U.K. You're going to see -- are we going to see the British economy sort of tank pretty quickly because no investments are coming in?

STEVENS: Well, probably not tank very quickly, but just in a broader context on that, Max, exports from Asia to the U.K. are pretty small overall. If you want a number, less than 1 percent of Asia's GDP is tied up with exports to the U.K. So, it's not going to move the needle that much.

Having said that, the Chinese are investing in the U.K. They are investing in many parts of the world. They are going to be careful, as any other country is going to be careful with this amount of uncertainty. And the other thing to look for as well is of course the City of London, a very, very important financial center for the world.

And one of its biggest operations is in financial services and fund management things like that. And a lot of the Asia-based companies have gone to London, set up operations in London and then found out from London into Europe. If Britain is out of the E.U. they are going to have to look at investing in London, in the city of London and move their operations into mainland Europe.

So, that's going to have an effect on the city which as we know is very important part of the British economy, I think it's 12 percent GDP comes from the city alone. So, that could hurt. But as far as broad investment, with this sort of uncertainty, China

is not alone in saying hold on, we need some clarity, we need something to hold on to about what the trade deal is going to be, what the -- if there is a recession how bad it's going to be. All of those things have to be factored in before they stop taking big investment decisions. Indeed, they may decide they may just going to put it all in Europe.

FOSTER: OK. Andrew, in Hong Kong. Also, Nina on the trading floor in London. Thank you so much. We've got some breaking news for you. Another shadow cabinet member stepping down just in the last few minutes. This is from Stephen Kinnock. Robin is with me. His position...

(CROSSTALK)

ROBIN OAKLEY, CNN POLITICAL CONTRIBUTOR: He is only PPS.

FOSTER: Only POPS.

OAKLEY: He's not actually a member of the...

FOSTER: Ah, there you go. So, he is PPS. But he is saying that -- in his letter to Jeremy Corbyn, "I have the deepest respect for your long service. A lot of dot. In light of the deeply disappointing referendum result caused in part by the half party and the lackluster role that you played in the campaign, I've come to the conclusion that you are no longer the person to lead the party."

OAKLEY: Typical of what we've been hearing from the people who've resigned from the shadow cabinet. They feel that Jeremy Corbyn did not put any serious effort into campaigning for Britain to remain in Europe. That he is a long time euro skeptic himself.

But one of the difficulties that the rebels against Mr. Corbyn are facing is that, you know, one of the worries in the Labour Party is that you keep with the very strong anti-European pitch have been taking enormous number of votes away from labor.

So, there they are, you know, criticizing their leader for not making a big enough case on remain but at the same time they are scared stiff of you keep and that a lot of them are asking for a new policy on immigration because they feel that will delay a lot of assertions by former labor supporters to you keep on to the leave campaign.

FOSTER: We were speaking earlier with John Redwood about where we go from here. We talked about Article 50. This process that's instigated by the U.K. to stop negotiations to leave. He is suggesting we shouldn't bother with that anymore. So, what is the next step in that leaving the E.U.?

[03:10:04] OAKLEY: Yes. We're not hearing that suggestion yet...

(CROSSTALK)

FOSTER: Why? OAKLEY: ... from anybody in the government.

FOSTER: He was a powerful voice in that campaign, wasn't he?

OAKLEY: Oh, John Redwood has been an effective anti-European voice for a very long time. And he was also making the point in conversation with me aftermaths that George Osborne, you know, not only producing that emergency budget here and now, but we just moved back into the ordinary budget cycle because there is always an autumn statement and a review of the economy in the autumn.

So, he's saying, you know that shows that the case being made by the remain camp that it was an emergency to be dealt with by such a budget. He is fast and serious on that article.

FOSTER: OK. They are coming in thick and fast. We got more resignations, as well, which is breaking altogether. It's hard to keep up with at the moment. Robin, thank you. Back with you later on as we get more names.

The E.U. says the U.K. to make a hasty exit meanwhile. But the whole process could take quietly sometime.

International diplomatic editor, Nic Robertson joins us live from Brussels from the seat of the E.U. What do you make of this we refer form John Redwood that they are not going to invoke Article 50. They are going to do it a different route.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, obviously what's emerging from Britain at the moment is a robust position that is contrary to what most of the European leaders that prefer to speak on this have said that they want Britain to do.

Look, there's been long been antipathy towards the position that Britain has taken over its membership in the European Union. It didn't want to be a part of a Schengen borderless, you know, passport free zone inside Europe. It didn't want to be part of the euro area either. It wanted to keep the pound sterling.

So, there's been a degree of impatience, of, you know, of unsettled feeling over Britain's real long term commitment to the European Union for a long, long time, and I think perhaps some of that we are seeing the frustrations and we have seen over the weekend.

It maybe now time that obviously we've been in a period over the weekend as well, where we haven't really heard from British officials about which way, of which tone they want to take. But now it's now becoming clear of George Osborne he's saying that he wants to take it slow.

Boris Johnson in his op-ed over the weekend said the same thing. That the Europeans for their part now are going to have to take on board what British officials are saying, as well. So, perhaps we may hear a tempering of this expectation and desire on the European's part that Britain would begin to enact Article 50 and would begin to negotiate this exit swiftly. Look, one of the things the Europeans want to do at the moment is to

make sure that they sort of staunch this wound, if you will. That there are no other limbs will drop off the body of the European Union, that no one else will try go for, you know, a referendum on exiting the European Union. That's a concern.

Perhaps stabilizing the economy is one of the principal issues. And certainly that seems to be behind why U.S. Secretary of State John Kerry is coming in to town today and meet with the E.U. from policy chief Federica Mogherini.

And no doubt I think what he'll bring to the table is also a sense of let's slow this down. Let's not get too angry about into our toys about this. This is what

(BEGIN VIDEO CLIP)

JOHN KERRY, U.S. SECRETARY OF STATE: The most important thing is that all of us, as leaders, work together to provide as much continuity, as much stability, as much certainty as possible in order for the marketplace to understand that there are ways to minimize disruption. There are ways to smartly move ahead in order to protect the values and interest that we share in common.

(END VIDEO CLIP)

ROBERTSON: So, I think when David Cameron gets here later in the week and when you get all of the heads of the, what is now 27 plus one European Union countries together, than perhaps we may begin to hear some of that tone change. It is too soon to say. I mean, passions on this are going to be high for some time, Max.

FOSTER: OK. Nic, thank you very much indeed. As you're hearing there the E.U. wants to get the Brexit done as quickly as possible.

We'll discuss what kind of obstacles may be in their way. Plus, Scotland's First Minister wants to keep her country in the European Union, as she may look to block the Brexit in her own way. We'll explain next.

[03:15:00] (COMMERCIAL BREAK)

KATE RILEY, CNN WORLD SPORT ANCHOR: I'm Kate Riley with your CNN World Sport headlines.

It's been an exciting day of the last 16 matches of the Euro Championship in France. Let's start with the host. You have to survive a scare early on in their match with Ireland in Leon. The French (Inaudible) are trailing the Irish after Robbie Brady scored from the spot in the second minute.

But the France hit back Atletico Madrid man Antoine Grizmann will get a brace to take the lead and go pass Iceland into the quarter finals. France will now face England or Iceland in the next round at Stade de France. World Cup holders Germany had arguably their best performance of the tournament so far. They may say Slovakia in Leo Jerome Boateng scored his first international goal to Joachim Low's side ahead. Mario Gomez double their lead before Julian Draxler put the icing on the cake, 3- nil is held within.

Slovakia go home. And the Germans still haven't conceded a goal.

And the Belgians in their golden generation say Hungarian to leave in their last in the day. Belgium held a 1-nil lead until 15 minutes from time, and then they added three more to goals to beat Hungary 4-nil. The biggest winner of the tournament so far. They will face Wales next in the quarterfinals.

And the round of 16 wraps up on Monday with Italy taking on defending champion Spain followed by England up against Iceland.

And that's a look at all your sport headlines. I'm Kate Riley.

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UNIDENTIFIED MALE: We're in absolute disaster. I just can't believe this is happening than the people have been so badly misled. It's an insult for the country.

(END VIDEO CLIP)

FOSTER: Welcome back to CNN's continuing coverage of the U.K.'s vote to leave the European Union.

As you heard the Brexit turned in to a re-regret it to some Britons. In the last hour, you see finance minister George Osborne gave a televised address in which he try to calm any fear about the British economy.

This as the U.K.'s Parliament is set to meet for the first time since the Brexit vote on Thursday. The resignation of the Prime Minister David Cameron on Friday.

Now Labour leader Jeremy Corbyn facing a bloody revolt within his own party. Multiple members of his shadow cabinet resigned, calling for new opposition leadership. Scotland First Minister meanwhile says the country will do whatever it takes to stay in the E.U.

Nicola Sturgeon who urge says that she wants to make sure the country's democratic will is respected after a majority of Scots voted remain in Thursday's referendum.

(BEGIN VIDEO CLIP)

NICOLA STURGEON, SCOTLAND'S FIRST MINISTER: Now my challenge are also my responsibility as First Minister is to seek to negotiate to protect Scotland's interest. What's going to happen with the U.K. is that there will be deeply damaging, and painful consequences of the process of trying to extricate the U.K. from the E.U. I want to try to protect Scotland from that. (END VIDEO CLIP)

FOSTER: Nicola Sturgeon has raised the prospect now of blocking the Brexit legally.

[03:19:59] CNN's David McKenzie joins us now from Edinburgh with more on her strategy. How is this work then, how does Nicola Sturgeon block the Brexit?

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, it's very much are called debate. But certainly what she's saying, Max, is that there could be a vote here in the Scottish government in Edinburgh to block any moves to formally exit the E.U. by doing a legislative consent motion.

Now that's a set up here in Scotland that would allow Scotland to effectively veto any moves by Westminster to do any major policy that would Scotland. And that's the latest of several strategies that Nicola Sturgeon has put forward to try and keep Scotland within the E.U and other areas are obviously talking directly to E.U. diplomats.

We expect that in the coming days and finally of course, potentially for Scotland to hold another referendum on independence. Max?

FOSTER: I mean, the idea of another referendum in Scotland, and even in the U.K. is quite something but it is going to happen, isn't it? If you look at the strategy on how she has played things from here and her language. It does feel as though she is moving that way and it is, you know, fundamentally what her party is about.

Do you think there is the appetite though in Scotland amongst voters?

MCKENZIE: Well, you know, if you believe Boris Johnson in today's paper, leading member of the leave campaign, he wrote in his column, "I don't detect any real appetite to have another referendum here in Scotland."

Well, I have to say in the last few days, speaking to Scots in Edinburgh, and, you know, hearing from online polls, not scientific but certainly significant to look at through the weekend here in Scotland.

A lot of public sentiment pushing towards another referendum and several people I have spoken to who said last time around they voted to stay in the U.K. say they've changed their mind because of the significant change in the political landscape.

Now, the challenge for Nicola Sturgeon and the SMP is they need to get the timing right and they need to make sure if they have another referendum that they absolutely get in to the independents otherwise it could be a very challenging moment for them. Max?

FOSTER: OK. Thank you very much, David for joining us from Edinburgh. And I'm joined by Quentin Peel, associate fellow London's Chatham House, an international affairs think-tank. What do you think about of a Scottish referendum on whether it is likely and where it will go? QUENTIN PEEL, LONDON'S CHATHAM HOUSE ASSOCIATE FELLOW: I think it's

likely. I'm not sure quite how quickly it would come, but I have no doubt that Nicola Sturgeon is looking for a way to hold it. And I think in the current climate it would be really quite likely to vote for its independence.

So, I think all that's out there, I think what's slightly lesser in this apparent strategy of trying to block the Brexit process in the Scottish assembly. There the legal opinion is divided. There is one legal opinion that says, yes, they must give their ascent and they could block it.

And the other opinion says no, that the U.K. government in Westminster has actually paramount power at least in the emergency circumstances and this is an emergency.

FOSTER: In the last hour, we heard from key member of the leave campaign. John Redwood saying they're not -- there's possibility strategy of not invoking Article 50 which is what the whole premise of the referendum was pretty based on which was and do Nicola Sturgeon as well, wouldn't it?

PEEL: Well, it might. But I think Nicola Sturgeon's service and strategy is actually clear she wants to get to independents but she won't call a referendum unless it's going to vote independence.

FOSTER: Yes, yes.

PEEL: Now what on earth John Redwood is on about saying we won't do the strategy. I mean, I think all I can conceive of is that he wishes to precipitate, if you like, a suspension of British membership by actually starting to break the E.U. rules without doing it in a legal way.

FOSTER: So, we come out of it that way.

PEEL: Yes, we come out of it by suspending free movement and labor and refusing to recognize the decisions of the European Court of Justice.

FOSTER: How would you describe the fallout from that?

PEEL: I think it would be much more poisonous. I think that actually would deliberately alienate our partners and then their inclination to actually, if you like, give us a good deal I think would be much less.

I think the key person they are going to have to negotiate, as ever, is Angela Merkel. She is being very calm and very sensible in saying we don't need to rush but we can't wait forever and then we have a sensible negotiation.

We'll see but John Redwood doesn't seem to want that.

FOSTER: No. But, you know, it's really about what Boris thinks right now, isn't it? He's leading, even if he doesn't become Prime Minister, is certainly people are looking to him for leadership right now and his strategy seems to be just to wait on Article 50.

[03:25:04] Keep it in the air and invoke it as in when and using that as a bargaining tool with, you know, Berlin, Paris, and Brussels. But those capitals don't actually have a duty to speak to Boris Johnson, the head of him invoking Article 50.

PEEL: No, they don't. I mean, he has no -- well, they don't have a duty to speak to him at all unless he is Prime Minister. But, I think that, look, everybody wants to limit the damage in this. And there are two large potential damages. One is the political contagion effect and the other is economic.

Political contagion is a reality. It could -- there could be other referendums in other countries. Economic contagion we are waiting for the markets.

FOSTER: OK. We're looking at the markets. And actually London is not actually bad, as Richard Quest was pointing out, actually the German markets are down more than the British markets, just the Brits coming on that.

PEEL: Well, I think that either they know something we don't know or actually there is a real...

(CROSSTALK)

FOSTER: It's moving again as well we're told by Richard anyway. It's all over the place. So, what's going on.

(CROSSTALK)

PEEL: Yes. I don't think there's enormous uncertainty and that's what markets thrive on and don't like.

FOSTER: OK. Thank you very much. We'll try to explain this over the coming days and weeks. The Brexit decision is done but the rest of the deal has a very long way to go. We'll bring you the latest. We actually have from France and Germany next.

Plus, we'll bring you the day's other news including a victory for the Iraqi army in the fight against ISIS. But its biggest challenge is still lying ahead.

[03:30:00] (COMMERCIAL BREAK)

FOSTER: Welcome back to our viewers in the United States and around the world. This is CNN's continuing coverage of the fallout from the U.K.'s decision to leave the European Union.

I'm Max Foster in London.

CHURCH: And I'm Rosemary Church from CNN center. I'll be back with all of the other headlines around the world in just a few minutes.

But first let's get the latest on the global market reaction to last week's events in the U.K. Max? FOSTER: Yes. Rosemary, the European markets have been open for about

half and hour and most are down. You won't be surprised here.

And so, that first 30 minutes but they're not down as much as many people expected. Analysts have predicted continued volatility in the new trading week of course. But you can see they are all down. Actually the CAC, we need to talk to Richard on this in just a moment, down 8 percent, so that's pretty significant.

And these are the Asian markets regaining some ground after Friday's very steep losses there. Hong Kong's Hang Seng closes in about half an hour, so you know. So, they are heading into the final straits, but generally pretty good news there. But that is in the context of really appalling news on Friday.

CNN Money editor-at-large, Richard Quest joins me now here in London on more analysis on the global market reaction to the Brexit vote. Just briefly, we got Brexit...

(CROSSTALK)

RICHARD QUEST, CNN'S QUEST MEANS BUSINESS HOST: More than briefly.

FOSTER: Yes.

QUEST: I just, I'm not entirely certain on the numbers.

(CROSSTALK)

FOSTER: They seem pretty dramatic.

QUEST: Yes. They are the numbers that I was seeing on my screen a short while ago.

FOSTER: OK.

QUEST: But they're not the numbers I'm seeing now. So, I offer a slight caveat that actually I don't think the CAC in Paris is off anything like nearly as that particular number.

FOSTER: But let's wait on that until we have confirm numbers.

QUEST: Yes. Good idea.

FOSTER: What do we know about -- oh, here we are. There you go, Richard, what do you make of that?

QUEST: Yes, that's a lot better. I think what you are looking at is maybe Friday's closer. And what I think is, you know, you are seeing -- I don't say calm before the storm. I think you're seeing a pause for breath.

FOSTER: OK.

QUEST: There is no -- here's the point, there's no obvious reason for markets to move in either direction now the news has been released, now that we know that Brexit is happening. There's no economic data. There is no further announcements. All we have is uncertainty and fear about what might happen.

And that's what the markets over the medium term are going to trade on but they are not going to be a reason to fall out of bed. The falling out of bed happened on Friday.

FOSTER: And that's what George Osborne was addressing just in the last hour.

QUEST: Yes, the British finance minister, the chancellor was quite clear. He did not go back from anything that he said during the campaign and he was one of the strongest remainders in the business. But he did admit that the U.K. economy would face a period of adjustment. And that was something -- as he said that the economy was robust and was able to withstand the chancellor.

(BEGIN VIDEO CLIP)

OSBORNE: It will not be plain sailing in the days ahead. But let me be clear, you should not underestimate our resolve. We were prepared for the unexpected and we are equipped for whatever happens.

And we are determined that unlike eight years ago, Britain's financial system will help our country deal with any shocks and dampen them, not contribute to those shocks or make them worse.

(END VIDEO CLIP)

QUEST: And so, what he said, again and again, along with the Bank of England that there were months of planning, contingency plans were in place. They have would move into operation and that there is no need, if you like, for undue panic.

Now the big issue of course was the budget. He had threatened and feared an emergency budget raising of taxes. He now says that will not happen until maybe a new Prime Minister comes in the autumn and there's a proper review, an O.B., Office of Budget responsibility review of what the economy is.

FOSTER: So, what he is trying to do there is quell the short term uncertainty. What about the longer term and what's going to happen to this economy?

QUEST: The longer term on the question of a recession, he said I do not revolve -- resolve from anything I said during the campaign. He said there will be a recession. He said there would be a recession.

I mean, most people seem to believe that you can't have this level of disruption even though we're not seeing it in the markets, you are going to see businesses pausing for thought, you are going to see consumers not buying that extra fridge or that changing of the car because they don't know about their jobs. There will be unemployment, employment uncertainty.

In that environment you only have to knock off a percent or two of growth and you are in recession. So, will there be a recession, no one can say for sure. Is it likely there will be a recession, highly possible.

FOSTER: How do you think everyone has coped in the last couple of days which is going into this week?

QUEST: Oh, come on, Max, this is -- this is unprecedented. You've got a government where a Prime Minister is resigning in the autumn. You've got an opposition, her majesty's loyal opposition, which is absolutely teetering upon collapse.

[03:35:08] You got the pound which is down, 10, 12, 15 percent since its high on Thursday. You've got a stock market, you've got businesses that have no idea what the future like -- what the future economic environment and trading environment is going to be. Would you like an aspirin?

FOSTER: No. I've decided -- I definitely need to lie down. But it's very hard to make sense of the story. There's so many strands to it.

QUEST: Let me find the quote, if I may. If I can just find the quote. I know you want to move on to other things but the quote from city, who basically said, this is city, this is city morning briefing note to investors.

It says, "The reality, however, is that it's extremely hard to predict with any certainty what the economic outcome will be." In that situation, investors tend to sell or sit on their hands. Consumers don't spend. The economy goes down.

FOSTER: It's raining, suitably. Richard, thank you. The U.K.'s historic decision has sent shock of course throughout the continent as well as the market above and beyond the initial chaos in the world as the E.U. faces the risk of a possible domino effect from the Brexit.

Our Atika Shubert joins us live from Berlin, and Jim Bittermann is in Paris. Atika, first to you, because Chancellor Angela Merkel seems like the one friend that the U.K. has in Europe right now. What sort of things is she saying today?

ATIKA SHUBERT, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, she said on Saturday that, quote, "There is no need to be nasty about negotiations with the U.K." We are expecting to hear from her later today. She has a flurry of meetings.

She is going to be meeting with the European Council President, Donald Tusk, but also with French President Francois Hollande and Italian Prime Minister, Matteo Renzi.

Now that particular meeting will be interesting. Because Hollande has been very tough saying that, you know, once the U.K. leaves, essentially there must be a deterrent effect to make sure that no other E.U. members, nobody else thinks of holding a referendum like this.

But clearly, Merkel has taken a more conciliatory tone and the most clearest message of this has come from her chief of staff, Peter Altmaier. He gave an interview to the local R&D paper.

And here's what he said. "Politicians in London should have the opportunity once again to reconsider the consequences of a withdrawal." That seems to leave the door open, just a little, perhaps for those in the re-Brexit camp who want to see another referendum or find some way out of this.

Other E.U. members however have been very clear. Britain has voted and out means out. So, we will be watching to see what Merkel says today on this.

FOSTER: OK. Atika, thank you. Jim, in Paris, a very different story there. There is anger with the U.K. and there is a sense that they want to punish the U.K. They don't want to encourage any other similar movements, certainly not within their own country.

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, exactly right. I mean, there is great fear here about the Brexit. The fact is that there is some nastiness here toward David Cameron particularly. There is an amazing amount of animosity over this idea that the referendum in Britain was seen as something was totally unnecessary and has led to the crisis that they are now confronting.

President Hollande on Saturday had meetings with all the political parties here including the French national which is have been calling very precipitously for an exit from the European Union for France. She said afterwards that Hollande made it, for her in no uncertain terms and may have used a naughty word.

In fact, no uncertain words that he was not going to have any kind of referendum in France as long as he is president. She said, though, if she gets elected president, this is Marine Le Pen, that she will, in fact, within six months call for a referendum on France's status within the European Union.

So, there is a great deal of animosity here, there is a great of sentiment in the government corridors of the out is out camp. The fact is that people would like to see this dealt with in the shortest period of time. Doesn't look like that will happen, but the shortest period of time to eliminate the kind of uncertainty that Richard was talking about earlier.

An interesting, a list side note here, is that, Sadiq Khan and Hidalgo, the mayors of London and Paris got together over the weekend and published a joint editorial, basically saying that no matter what happens between their countries that the two cities, the two capital cities should work together to improve relationships between them.

FOSTER: Jim, in Paris, also Atika in Berlin, thank you very much indeed. A lot more from you throughout the day.

We are going to bring in CNN Money Africa correspondent, Eleni Giokos now for more on the global volatility following on the Brexit vote. She joins us from Johannesburg. And extraordinary to see those African markets and currencies falling on Friday in reaction today.

[03:40:00] It really does express what a global story this is.

ELENI GIOKOS, CNN MONEY AFRICA CORRESPONDENT: Absolutely. It's definitely a global story. One thing that we know is that emerging markets do not enjoy uncertainty and definitely risk aversion is now at play.

Let's take a look at the South Africa rand, purely because it is a very important proxy for emerging markets. And mostly when investors wants to make a bet on EM's it's reflected in the rand. It dropped, Max, 8 percent of one point on Friday.

It's the lowest for that we saw that lowest level for rand since the 2008 financial crisis, which is really indicative of some of the uncertainty that emerging market face.

When you look at the Turkish lira, we also saw a big drop say around of 4 percent. In Brazil pretty much the same picture. The markets coming under significant pressure.

So, a sea of red really dominating the emerging markets space. When we look at what the South African market is doing today. It was down 4 percent on Friday, the JFC now is around 8/10 of a percent, but it's not all red when you look at the Johannesburg stock markets.

It's the gold stocks that are really doing very well on the back of a gold price showing some gains as well. Financial stocks coming under pressure. Any companies that have a global, multinational footprint, specifically within the European markets is also taking a knock.

Another very interesting thing to look at is a SAB Miller, A.B. InBev tie up, we know the deal hasn't actually gone through as yet. And remember it was 44 pounds a share. Now that is looking not very attractive for shareholders.

So, the ramifications are not just the back trade, it's not just about worries about fragmentation within the European Union as a result of this Brexit but more so about the companies that have that large footprint that operate across various territories.

FOSTER: OK. Thank you very much. That's the African view. It's extraordinary how it is having an impact around the world. Thank you so much.

Coming up our special Brexit coverage continues. What the U.S. presidential candidates are saying about the controversial vote after the break.

And Rosemary will have a roundup for the days' other top stories including Pope Francis' comments about the church's treatment of gay people. What he said coming up.

[03:45:00] (COMMERCIAL BREAK)

CHURCH: A warm welcome back to our viewers this the U.S. and all around the world. I'm Rosemary Church here at CNN Center. We are continuing to bring you coverage of the fallout from the U.K.'s

vote to leave the European Union. But first, let's check some of the other stories we are following this hour.

Hillary Clinton says the U.S. will bounce back from the economic turmoil triggered by the Brexit vote. On Sunday, the presumptive democratic nominee drew comparisons to what's been happening in the race for the White House and the decision by British voters to leave the E.U.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, (D) U.S. PRESIDENTIAL CANDIDATE: Just as we have seen, there are many frustrated people in Britain, we know there are frustrated people here at home, too. I've seen it. I've heard it. I know it. That's why I've worked hard to find solutions to the economic challenges we face.

(END VIDEO CLIP)

CHURCH: A senior Iraqi general says the battle for Fallujah is over and the government troops captured that ISIS stronghold on Sunday. He says more than 1800 ISIS fighters were killed in the month-long operation. But the situation remains extremely dangerous.

Iraqi forces are dismantling land mines and booby traps that still litter many neighborhoods. The Iraqi military now turns its sights to the even bigger challenge of retaking Mosul.

CNN senior international correspondent, Ben Wedeman has the latest on that.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Somewhere in that scrum is Iraq's defense minister Haider el-Abadi flew from Baghdad to hear the plane south of Mosul with a gaggle of Iraqi media in tow.

ISIS, they says, is just a 15 or 20-minute drive away from here. The black smoke on the horizon, officer say, is an attempt by the extremist to obscure the vision of the Iraqi coalition aircraft. Iraqi has been very publicly gearing up for the liberation of Mosul, the mother of all battles in the country's war against the group. The plan sounds simple enough.

What they're going to do is work on driving ISIS out of the towns and villages like this that surround Mosul before finally going into the city.

And they'll be doing it with a little help from their friends like these American and British advisers in the operation center nearby. As preparations mount for Mosul, there are American boots on the ground and perhaps more to come supplementing the well over 3,000 already here.

And when will this much-anticipated offensive take place, I asked the defense minister? "The Prime Minister and the military leadership," he replied, have said that 2016 will be the year of the liberation of Mosul and the rest of Iraq. That leaves just over six months. And the clock is ticking.

Ben Wedeman, CNN, south of Mosul.

CHURCH: Pope Francis says the Catholic Church should apologize to gay people and seek forgiveness for how they have been treated. He made the comments Sunday in a news conference on his flight home from Armenia. The pope said she church should apologize to other groups it's offended.

(BEGIN VIDEO CLIP)

POPE FRANCIS, ROMAN CATHOLIC POPE (TRANSLATED): I believe the church should not only apologize to this person who was gay and was offended but to the poor, to exploited women, to children exploited for labor, it has to ask forgiveness for having blessed many weapons.

(END VIDEO CLIP)

CHURCH: And in terms of the Brexit, Pope Francis says, quote, "Unity is always superior to conflict."

And that is news from all around the world. Keep it right here on CNN. Just ahead, we will go back to Max Foster in London for more expert analysis of the U.K.'s vote to leave the European Europe Union.

[03:50:00] (COMMERCIAL BREAK)

PEDRAM JAVAHERI, CNN METEOROLOGIST: Thunderstorms blossoming across portions of the United States for the past couple of days. Massive frontal boundary here of course, some excessive heat as well in place in recent days over this area.

In fact, if you take a look. This is a 3200 kilometer stretch of land there where you seeing continuous outline of active weather pushing in. Some of the strongest storms locked in around portions of Indianapolis, just off south of Indianapolis, just north of Louisville, around Columbus and the State of Ohio there getting in some strong storms in the last couple of hours.

And as you go to the morning hours a lot of the heat in atmosphere of course that plays here. So, the thunderstorm activity is expected to follow suit, as well into the early-morning hours.

But back towards the west, around portions of the plain states around the Eastern Colorado, parts of Kansas on to Nebraska, southern Wyoming, that's where the best bet is for severe weather come Monday afternoon.

Temperatures really warming up across the i-corridor down towards Los Angeles of 26 degrees. Vancouver, British Columbia not too bad after 24 degrees there and sunny skies. And work your way down towards Havana, Cuba, looking at the lower 30s.

Should remain around Mexico City towards Chihuahua, temperatures there from the mid-20s up around say 33 degrees. And to the south we go where you expect the rainy season to pick up in intensity, Parana, Berlin, temperature there around 32 or so. Salvador around Rio should stay dry the next couple of days. Temperatures around 27 or so degrees in this region. And take you to the south, maybe with the coolest weather on Rio Guayas.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Shocked and ashamed to be British today. I can't believe it. I'm really disappointed. Disappointed in the country.

(END VIDEO CLIP)

FOSTER: Many Britons feeling that way it has to be said after the U.K.'s vote to leave the European Union.

Welcome back to CNN's continuing coverage of the fallout from a historic decision. I'm Max Foster.

Our leaders here in London and around the world are urging calm after a frantic response in the world markets. But the leadership here is in a bit of shambles, it has to be said a bit. We don't really know who's leading.

I mean, the Prime Minister is in position, David Cameron there but he is going to be gone by October. There's no sign yet of who will take his place. We couple of front runners. One possible candidate, opposition Labour leader party -- sorry, the opposition Labour Party leader Jeremy Corbyn hasn't inspired any confidence from his own shadow cabinet.

Nearly a dozen of his ministers has resigned and Corbyn fired another for reportedly planning a coup. In the midst of this political upheaval, the Chancellor of the Exchequer, George Osborne sought to calm investors and the markets insisting that Britain is ready for what lies ahead.

But with us now is our CNN political contributor Robin Oakley. Robin, we are just watching these labour shadow positions fall in front of us. I mean, there's been a load of them. We can't actually keep up with them at the moment in the last hour we've seen lots. Bu also Jeremy Corbyn has replaced them with left leaning members of his own party. He hasn't of much choice now, has he? He can't have that cohesive, the shadow part he had before.

(CROSSTALK)

OAKLEY: No. Very limited choice but he's gone ahead, he's immediately fill these positions signaling his determination to fight on and not to give way. We're going to have a vote tomorrow on a vote of no confidence in him as Labour Party leader.

[03:55:03] The significant thing now I think is that some of those who have rebelled against Jeremy Corbyn are not just the old glares and the moderate centrists in the party, but some left wingers have begun to lose their confidence in him. I think largely because the potential early election has concentrated minds.

People thought, well, there are two or three years to make for him initially to make his mark or we can decide to get rid of him before an election if he hasn't got to it. Now they are saying, well, we might have an election within a few months and we can't afford to take the risk are going to the country within the...

(CROSSTALK)

FOSTER: Your current thoughts on the runners to the Prime Ministership.

OAKLEY: Well, inevitably, Boris Johnson is a front runner, but there are a lot of people who want to stop Boris campaign. And that could possibly focus on the Theresa May, the Home Secretary.

She was in the remain camp but very reluctantly and fairly quietly she...

(CROSSTALK)

FOSTER: Yes. And she has strong views on immigration.

OAKLEY: Yes, she did have some strong view on immigration, but she argued her case even when she, you know, wasn't particularly of the remain views. I think she was given few hostages to fortune, she would be the ideal stop Boris candidate if anybody is going to cement...

(CROSSTALK)

FOSTER: But she have to give a tough job presumably.

OAKLEY: Oh, yes.

FOSTER: Yes. OK. Robin, thank you very much indeed. Thank you so much for joining us. I'm Max Foster in London. I'll be back with another hour of news and analysis on the U.K.'s decision to leave the European Union.

From here the House of Parliament where M.P's they will return for the first time today after that crucial vote and the political meltdown that followed.

[04:00:00] (COMMERCIAL BREAK)