tv Bloomberg Go Bloomberg March 10, 2016 7:00am-10:01am EST
he was known as the king of wall street, former salomon brothers ceo john gutfreund has died. ♪ david: welcome to bloomberg . i'm delighted to say we have jon ferro and stephanie ruhle. stephanie: it -- is ecb day. >> what a morning. stephanie: sad day for wall street. john gutfreund, mentor to many an icon to the street passed away yesterday. david: the creator of the modern bond trading business.
stephanie: a cultural leader. we think about what wall street has been or the last war years. mike bloomberg to michael lewis talk about -- talking about what an extra ordinary character he was. this ecb announcement coming today. you are looking at green, matt miller. poker andad liars that is what got me interested in this business. i had the honor of interviewing john gutfreund on many occasions and an absolute giant in the industry. anyone who has not read the book should. look into his career. markets, gains in futures ahead of the ecb meeting. all about the ecb meeting today. we were playing cool and the gang earlier, excited. stephanie: you were playing cool and the gang.
i would like to separate you. matt: a celebration. seeing what mario draghi does, the market expects him to cut the rate by 10 basis points, 80%. a 20% chance, according to futures that he cuts by 20 basis points. that would be the bazooka. overnight in asia in anticipation of this, the shanghai, down 2% and hong kong unchanged and he nick a up one and a quarter percent. down.ope, the footsie is these are negligible numbers. nothing going on. traders are turning off the computers and algorithms in preparation of the statement and speech because there are -- they are too complex for computer training to deal with. stephanie: how big mario draghi's cut is and how explicit
he gets, what negative rates will do, what they do to savers and european banks because this is a mixed picture from european banks over the last couple of weeks. two weeks ago we look at deutsche bank saying, could there be a run on this place? a week later, positive signs, the more we see negative rates, the tougher it is for the european banks. >> i remember waking up in december looking forward to the ecb decision. stephanie: you need a better christmas. >> early december. people looking for a move. even though everyone expecting big things that morning. the massive disappointment and the positioning on the euro-dollar in the market, is very light. a people got stung in december and that means things this morning are very important. matt: as david pointed out long-term,over the
it has not done very much to move markets. not that that is their primary goal. but also to boost gdp growth. short-term, it causes more volatility and that brings me toward -- this is the best thing that happened to me since a new motorcycle. we have a function called global macro movers, it is amazing. if you type in gmm go on bloomberg, he was the equity index, sovereign bonds, commodities, these can be customized. you can look at a basket of all of the markets around the world. g 10 markets, g-20 markets. the moves are in order of their variation from the standard mean over the last nine days. you can change this lighter up top to see what the biggest moves are in terms of how many standard deviations away from the move. i go 1.5 standard deviations
away and you do not see much. new zealand, people are buying bonds. field is down 8% -- del is down 8% -- the yield is down 8%. this is a lot of fun and it can tell you a lot about markets. i am obsessed. especially ahead of the ecb meeting, because you can tailor this to g 10 markets or asset classes you think might move based on the rate move and see which are the biggest moves. acrossie: it is all eyes asset classes but we are seeing today, and yesterday, traders putting their pencils down. so many got stung because ahead of the last announcement, they got the idea from mario draghi that he would be pulling that bazooka out and when he did not, when it was much more tempered, many people say did this guy get
rolled by germans. ? >> the asset purchase program, one thing he did not deliver on in december that the market wanted to see was an increase in the size. walk into aou will matt miller size matters joke. matt: i will take it from here the bloomberg first news. >> the latest debate for hillary clinton -- the last debate for hillary clinton and bernie sanders before the florida primary, they clashed on things like immigration. >> when we talk about immigration, the secretary will remember one of the great tragedies of recent years his children came from honduras where there is more violence than almost any place in this country and they came into this country and i said, welcome those children into this country. secretary clinton said, send them back. >> each candidate accuse the
other of flip-flopping on immigration in order to appeal to the latino community. a warning from north community -- north korea, they said they would take military steps against south korea hours after firing ballistic missiles into the city. north korean tv did show the leader inspecting missiles and they claim they can put nuclear warheads on rockets. the canadian prime minister makes his first trip to the white house today, he and president obama expected to announce the coming of methane emissions, aimed at fighting climate change. the energy industry expected to fight the plan. over to you, david. david: we have to keep an eye on china. their consumer price index rose 2.3% in february, the most since mid-2014. a surging food prices lifted
inflation rates. as we look forward to a press conference from the governor, is he taking his numbers as good or bad numbers? >> the numbers are decent. they came in higher than estimates. cpi.on that tells you they're are getting closer to their target which is 3%, something that is welcomed. some say this may prove to be a temporary phenomenon, a seasonable affect -- seasonal affect would be week long holiday falling on the beginning of february. that drove up food prices and it is good to hear matt talk about lean hogs ripping. food was up 7%, that brought up all consumer prices in the main indicator. david: take the food prices are,
what happened to the underlying cpi? can you hear me? out, whatood prices happens to the underlying cpi? will come out, that was the biggest driver and you see the food accelerating. you see a lot of purchasing that goes on with families getting together, the biggest holiday of the year. you see a lot of that affect. the other side of the equation, producer prices. that rounded out a even four years in negative territory with a 4.9 negative print. david: governor joe is having a press conference on saturday, notoriously silent but now his third statement in three weeks. will this tell him he needs more stimulus? >> they have rates down at a
record low. never before have they had records as low as they go. there is room for more. there is currency pressures they have to watch out for. the currency fell to a five-year low. he has coming -- come out strongly to defend the currency and has come -- it has come back a little bit but we will listen closely while you are out on a friday night and we are in on saturday morning for everything he says. he will be there with his three top deputies. during the national desk the national people's congress and we will learn what china will do with her state-owned assets. later on saturday. still another major briefing for the three top security regulators. a busy day on saturday. david: thank you. stephanie: we are 40 minutes away from the ecb decision and
expectations, and anxiety are quite high, nearly three quarters of economists surveyed by bloomberg had expected the ecb to expand monthly bond purchases today and all but one cd the deposit rate being cut further below zero. rate beingdeposit cut further below zero. what do you expect, stephen? >> we are convinced we will see progressive action from the ecb. we have three expectations, a 10 billion euro expansion in the asset buying program. we see a cut of 20 basis points. and we see an extension of the timeline call the asset purchases by six months that will take us through september of 2017. >> i think the biggest call comes is not what expect the sp to do what the market will do,
even if they delivered to your expectations. will it be disappointment all over again? >> good morning. yes, this is a key point. december is the role model. when the ecb massively disappointed with the elevated market expectations. a key focus will be on what happens at the short end of the european bond curve. a key indicator i would look at its german two-year yield. they have fallen to -55 basis points. below the level we saw in december. the key point you were alluding to, a lot is already priced in. what that means is market expectations are elevated. it will be very difficult for mr. draghi to surprise the market and exceed expectations. >> drive the station between the front end and the bond market and the fx market, the dollar
since january 21 when president draghi signaled more stimulus is higher. the market has not moved in anticipation of this, the rates market has the why do you think there is that divergence over the last one month? >> a good point. i would like to make a comparison with japan because we have had aggressive policy action from the bank of japan. despite that, the yen is significant a stronger than before they implemented that action. against that, the euro is relatively weak. from that perspective we would argue the markets priced in much more yen strength than euro strength. the original point that a losses already priced in. we could be seeing a situation this morning where we have some disappointment. response, if we
do get disappointment from the market response, is that the euro will increase rather than fall. i think that would be mr. draghi's preferred response from the foreign-exchange market. financials is about instruments but will it effect, whatever he says, affect the underlying economic growth inflation? >> this is a good point, our view is that this is aimed less at growth in the eurozone, eurozone growth is all right, the real problem is inflation. articulate he inflation expectations. what mr. draghi he will try to do is boost inflation expectations. unfortunately, they have been falling over the past month or so. --ple have to really deliver he will have to deliver a surprise to get inflation expectations to rise. >> you are sticking with us.
at the headquarters in midtown manhattan. this is your 100 day anniversary. did you know that? jes: no. erik: is the honeymoon over? terrific, strong challenging but strong assets. the client basis is terrific, the opportunities are great. there is a lot in front of us. a lot of challenges but i am optimistic. erik: let's big about the immediate challenges, the market conditions appear to be pretty tough, volatility, complaints about liquidity and he fixed income market, the operating environment in general. is barclays on the same track as citigroup and j.p. morgan? a sales and trading business down? jes: the markets went through a germanic experience in --
traumatic experience and created a global calamity that we are still recovering from. how the banks evolve and how the regulars -- reg later to evolve to end up in a place where we have a safe financial system, where the banks will not get in trouble again and a functioning capital market that funk -- finances capital growth. we are in the middle of that and we are a player. we like the assets we have. we have redefined our strategy around being a transatlantic consumer corporate and investment bank. great businesses there. we like the us as we have as a bank. there is this evolution in the financial market we have to live through. erik: how will it affect you this quarter? jes: we have a pretty good january and february, the quarter is not over. we like our business is moving forward and we will not comment on the quarter. erik: these imbalances, the
tricky acts preventing the financial system from cratering again and creating an environment in which the handmaidens of capitalism can earn a return. is there any reason those balances will be better struck between now and the end of the year or is this where we are for now and for a while? jes: the markets are having some difficult times adjusting to what is happening with commodity prices, oil in particular. what is going on in china has had a big impact. this slow growth is a challenge for the markets. inflation expectations are incredibly low. that is leading to central banks talking about negative interest rates. this is uncharted territory. how the financial markets would respond to negative rates on a scale being discussed is, we do not know. the markets will be challenging this year.
the banking industry is so much inonger now than it was 2008, capital levels are completely different, the liquidity levels are completely different. we have a more robust taking industry than back then. a safer group of banks dealing with the challenging market. erik: the ecb will make its policy announcement a few minutes from now. expectationespread there will be more accommodative than they have been, negative interest rates are not an issue for your u.k. consumer business but you are operating in a european taking environment, how challenging are negative interest rates for barclays? jes: negative interest rates are a reality. on a very limited scale. negative interest rates are only on excess reserves. the interest rates for the consumer, across the banking industry itself are still positive. we are a long way from being a
disruptive influence in the banking industry. we have to keep an i on it and with inflation expectations so low, a challenge for the investment banks, central banks, to continue to be every day more accommodative and to try to push the economy forward through that accommodation. the aggressive monetary policy is having every day less and less ability to get the economies moving forward and that is a challenge for all of us. erik: more specifically as it concerns the banking industry, do not negative interest rates cause bank profits to shrink? don't think this incentivize lyndon -- great lessons and of for lending? jes: the retail banking practice, low interest rates. the net interest mark in the banks has been tricking because of low interest rates across the board. most of the retail banking industry is doing quite well,
barclays, our return on equity in our retail bank and credit card business are in the mid teens, great business. as we were talking, we are a huge that's usually important part of u.k. economy, about 30% of the united kingdom gdp every day goes through the payment types of barclays, whether the barclaycard or retail branches. we are linked with the economic success of the u.k. these are difficult times but we are doing well in our position in the u.k. retail market is great. erik: you have talked about the banks and strategies with some of your largest investors. some of them are equally skeptical. what is the hardest question you have had to answer? two strategicade decisions in the first 100 days. one was to sell to a
noncontrolling position in africa. we have been in africa for over 100 years in places like kenya and uganda. to make that decision to pull back from the continent has been very hard. that is a cap question. -- tough question. the investment -- our strategy is to be a transatlantic investment bank with our anchors being new york and london, the two financial capitals of the world. investment banking as an industry does not cover its cost of capital. if you look across the investment banks, on average, they do not generate a sufficient return to her in the capital that they have. that is a fundamental flaw in the financial system and a tough question to answer, when will that change. erik: as we welcome viewers and i say i am surprised you did not at a third difficult question, which was the dividend cut.
it came as a shock to many shareholders. when itthe dividend saves you a have billion dollars per year and there is such a strong shareholder preference for income in the u.k., more so than in the u.s. jes: we will continue to pay a dividend. we reduced it by roughly 50% for two years, 2016 and 2017. we have a core franchise, our consumer credit card's nest, corporate bank, an investment bank, that generated last year about 11% return on equity. we have a large non-core business. we are getting out of all retail banking in continental europe, which have sold our retail business in italy and spain. in the process of selling our french business. we have gotten the investment bank out of all the emerging markets, we closed nine countries in january. expensive. very to close and sell these businesses.
we have to get that non-core business behind us and 2016 and in early 2017 and in order to have the funding to do that, and have no constraints, we reduced our dividend for two years and when we come out of this process we will have the ability to pay very significant dividend going forward. erik: here is what some people do not understand, your core business generates 25 billion pounds a year in revenue and earns a pretax profit of almost $7 billion. you cannot tell me what you are going to earn on a pretax basis to years from now. why wouldn't you take the other side -- if we are talking about not that much money, why would we say we are not going to cut the dividend and we are going to love,in, maybe not the but the support of our ,hareholders and, if i am wrong by one billion pounds, two years from now, i will do a small capital raise? jes: we have the expense of closing non-court which is not insignificant and conduct
issues. erik: a cushion. jes: to make sure the management of barclays has all the resources they need, financial and otherwise, to get this bank into 2017 in a position where its results bailey will drive our stock to a level over its book about you. -- book value. erik: plenty of second-guessing about africa, your decision to sell the majority of barclays africa. i will not force you to explain this -- i will ask you if somebody came to you with a credible, fund in, above market bid for the whole thing, would you sell it? jes: we will look at it but the ultimate decision would be from our board of directors. the idea of keeping some option analogy in africa is attractive to there is a price where
sell it might make sense. we need to do that in concert with the government of south africa and with our other shareholders of barclays africa. we have given ourselves time, two to three years to get the sale done in a way that protects the franchise in africa and it is a separate bank and do it in concert with the south african government and the other governments we deal with across the continent of africa. erik: as anybody approached you with such a bid? jes: a lot of interest that is come our way. let's see how this evolves. erik: what a make a difference if the bid were bob diamond? jes: i do not think he has the financial capability. there has been a lot of interest. let's see how it evolved over time. -- eve all's overtime. es over time. erik: some cannot understand why
cap decided to remain in the business -- have decided to remain in the business. it is important for people in here to understand this. they work in the investment bank, a lot people say it is not a fair fight, barclays is uniquely disadvantaged by u.k. regulators. how do you respond? jes: i do not agree. the u.k. bank is a great place to be. we have a very good relationship with our u.k. regulators. the u.k. is the fifth-largest economy in the world. we have a great presence in the country. it gives a foundation and a base for barclays. almost every u.s. multinational has a very active presence in the u.k. we are their corporate bank, mcdonald's, apple, we help them in the u.k. that gives us a great competitive advantage over u.s. banks that do not have that capability in the u.k.
we have a great investment bank franchise in new york and in london. being one of the few european investment banks today, i think there is a competitive advantage for barclays. erik: how does ring fencing, the funding cost it imposes on your back, the balance sheet tack, bonus caps, and the senior management regime not put you in a disadvantage relative to jpmorgan, citigroup, goldman sachs, morgan stanley? jes: having worked at jpmorgan, there is no one there saying we have a huge competitive advantage because our jes: everyone is adjusting to the new realities of the financial markets. i believe that the u.k. regulators want to see a british bank within the leading investment banking group. remember, it is only 25% of our
risk p at we are predominately a retail consumer corporate bank. u.k. would love to see a british bank as a major player in the world's capital markets, and that is what berkeley is today. erik: you created the opportunity for me, so i want to play a scenario game. i am a multinational ceo remember, this is make-believe. i do a lot of mergers and acquisitions in the capital markets. tens of millions in fees are at stake. i decided to have my own little bkake off. parkways?r what is your pitch to me? jes: there is so much intellectual talent in barclays. we managed with a set of values that i am very proud of. it is the quality of our advice. we are going to give our best foot forward. we will give the client our best
ideas. our thoughts will be what is in their best interest, not what gets a transaction done. jpmorgan is an outstanding bank, so so is barclays. so we will let the ceo decide. erik: look at the return on equity or tangible equity. look at the cost-and come ratio. let -- look at the cost-income ratio. you're not what you used to be. jes: like a lot of investment banks, we have the medically had to reduce our risk-related asset spirit we have taken the risk down in half. faced with that headwind, actually, from 2014 to 2015, we doubled profitability. we have a long way to go it we have got to do a lot on managing the costs. so we will not rest until we deliver an investment bank a return that covers the cost of
capital. that is what we are going to accomplish. erik: but that is an industrywide problem. wishing is not going to fix it. wish itare not going to we're going to execute at barclays. i fundamentally believe that if we are going to rely at the global capital markets, funds buying debt and equity issued by companies, i do not believe the world will feel safe if we rely on the global capital markets where the intermediaries and investment banks cannot raise capital. it is just not a stable platform to fund the world's economy. erik: how long until it is forced correct? jes: i think it is happening now. i think all of the banks are looking at how to manage these balance sheets with far less risk in a way to deliver to clients but deliver profitability to our shareholders. erik: the third argument, the
culture simply cannot be fixed. the bank has paid 20 billion pounds in misconduct wiped out profit for, what, five years. jes: i have said this before. wall street that lost its way in the late 1990's. i believe that money became too much of a motivational factor. banking has got to reverse act back toime -- reverse the time when there was perfection. it was a profession. it is like being a lawyer or doctor appeared we have a lot to atone for it we made a lot of mistakes. we have no doubt, the only expense to risk for barclays is if we get it wrong in the future. erik: why are you certain you can change that culture? started in the banking industry that had the right conduct and had the right culture. it is going back to something i have seen before.
i think everybody in this room wants to get there. erik: that there are still unreasonable expectations when it comes -- you talk about the gulf am a between expectations and what is reasonable, what is rational. jes: we have reduced the bonus pool at barclays by over half in the last four years. they are all still here and working hard. we will get the culture in the right place. we need to pay competitively. but people are not here just because of that they want to do the right thing for clients. erik: that don't you have to be able to draw the line on pay? jes: sure. someone toing to buy come from barclays, never. people have to come here and stay here for reasons other than monetary gain. erik: that are you buying people from other places, for example, mr. compton? they left jpmorgan. did they leave for a pay cut?
but there is no guaranteed compensation. they can to barclays because of the institution. erik: you believe that? jes: yes, i do. erik: what is the one thing you need to do if you're going to transform this room where everybody is going your direction? jes: to reinsert the values of being a bangor as a profession. you know, realizing that -- to reinsert the values of being a banker as a profession. you earn trust by asking what the level of integrity that stands you out amongst the industry. i want people at barclays to feel that an act that way. i believe we can do that. erik: what is the single biggest risk to the company? jes: someone violating the values of this firm. brexit, the ecb decision
coming any moment, but a big topic is brexit. it is said 1000 people would have to move from the u.k. to paris in the event of a brexit's, which is not out of the question. what would barclays do? .es: we have come out publicly our chairman said that we believe the best thing for our customers and clients in the united kingdom is for the u.k. to stay part of the european union. erik: but what if it does not? jes: we will suffer because our customers and clients will suffer in the u.k. we are a u.k. bank. inside the united kingdom, we will be fine for but if our clients suffer, we will suffer. recommendatione that the u.k. stance of the european union. erik: i want to thank you for this opportunity. just staley, chief executive officer at barclays, here in staley.manhattan -- jes
stephanie, i am struck by his discussion on culture, that wall street lost its way, it was all about the money. it has to get back to a world where it is a profession or to how difficult is it to change that culture? stephanie: i thought it was a great interview, number one. antony jenkins had the job before jes and said it is not about compensation and it is about culture and he ended up out on his ear. staley really took a shot in the most aggressive way of getting jamie dimon's job. when he did not, he was out the door. i am not saying he is waving a flag, but it is tough for me to swallow. the morning antony jenkins got sacked, i went over to barclays. he wanted someone to come in, move quickly, and make significant progress.
jes staley has cut the dividend aggressively viewed values is one thing, but look at what he is doing, and it is aggressive. stephanie: they talk about markets, client flow. i do not hear too many people talking about culture. >> who can blame him? stephanie: to win, you have to right culture. >> we are waiting for the ecb decision. ♪
david pup moments away from the ecb decision. global head of strategy is back with us. and guy johnson is with us from london. in yourggressive predictions about what mr. draghi might do. outperform cannot the expectations of the market. willter december, that probably be -- after the disappointment last year, draghi has to deliver. much more is being cautious though. you look at positioning and what is happening, a much different decision. the market is no longer as short the euro.in you look at the volatility surrounding the euro, and the market has taken a little bit of protection.
everybody is a little bit more cautious. with the fed coming up, you can understand why. provides aw weeks lot of volatility options for traders. after december, i think the market is a little bit more cautious than it was. ecmi function. if you can put it behind me, i can show everyone. we heard that the two-year, and ven if this isstephe the best thing to look at. over the last year, the upper bound response has been about 2%, 2.5%, within the 30 minutes following an ecb decision to the lower bound response is about a f 5%.o december 3, we came way below the lower bounds.
is this the best instrument to look at? are you expect that we could see a move as drastic as we saw in december? >> first question, yes, i think it is probably the best indicator. it gives you a real indication of what the market is expecting willture ecb policy, which be driven by today's an announcement. in december, and went from-itis 45 basis points to minus 30 basis points and one days, and move of 15 basis points, quite a huge one. highly unlikely we see such a move today. but i tend to agree with what guy was saying. there are quite high expectations here. i think it will be difficult for mr. draghi to exceed those expectations. going to head of fx strategy at bmp para bought is sticking with us. this is what we are expecting. -0.4% ton estimate, -0.3%.
expected toing rate stay on hold. expectation, median , and according to the bloomberg survey, three quarters surveyed by bloomberg expecting qe to be expanded. let's get to that decision with matt miller as it comes and. matt: we are waiting for this decision. eco page.l up the ecb says it took monetary policy decision -- headlines rolling across the terminal, but we do not yet see an actual rate decision. it is cutting its main refinancing rate. that is interesting, isn't it? we did not expect a cut of the main refinancing rate, which is currently at 0.05%. it is lowering the benchmark interest rate to 0% flat. so this is not the depot rate we
are watching for, but rather, the main refinancing rate. economists we surveyed to not expect in that rate. we will see, any moment as the details continue to emerge, whether or not the ecb is cutting its depot rate and by how much it will cut its depot rate. they lowered their marginal rate 25% at so far, the main takeaway from the headlines i see rolling across my screen, is they cut their benchmark interest rate to 0% flat. would you agree that that is the main takeaway so far? jonathan: yes, there are three rates to the ecb would refinancing rate, which is the interest rate providing the bulk of the liquidity to the banking system. that has been cut to zero. the depot rate is the one a lot of people have been paying attention to. that has been cut i tend basis points -- i tan basis points --
corporate bonds. the composition. the duration, making headlines with the size and 80 billion euros a month. the composition, ecb will expand qe to include non-bank corporate debt. corporate debty and expand the balance sheet purchases to 80 billion euros a month, which is more than we were looking for. 75 billion euros a month. stephanie: corporate debt was not on the table. it is not traditional. it shows is that the bazooka is back. one of the reasons the market was so disappointed is because
that is what we were comfortable with. mario draghi would do whatever it takes, the market loved it. that is the draghi we knew. why so many investors were caught with their pants down was because it was a druggie we had never seen before. not only is he back, he is back in a better way. that will this be enough? if extending qe and the rate cut does not get the job done, what does that say? if that does not do whatever it takes, holy cow, we are in trouble. matt: that is helicopter money. >> i would like to hear from steven saywell. how do you react? >> it is interesting. i think it is a confused response we are seeing this in the market, as well. i tend to focus on a german two-year bond yield. that is slightly high on this. i think the argument i would make here is it is a bit of a surprise in that we have gone rates rather than
deposit rates. that would be a positive. as far as qe is concerned, the expansion to corporate debt, the jury is still out on that. we do not know what that will do to markets. the key point here is what it means for inflation expectations, whether it is sufficient to convince markets that the ecb mean business. a bit like the fed, during the fed's qe, they were successful convincing markets that they mean this will do it it takes. what comes out today's whether mr. draghi has done enough to do that. the key point here is, watch those german two yield spirit they do not seem to be falling at the moment are that will be the guide as to how we think things will pan out going forward. jonathan: cutting the deposit rate by 10 basis points. refi rates cut to zero.
marginal lending facility cut to 25 basis points. ecb expanded qe to 80 billion euros. expanding marginal assets to purchase. and a new long-term refinancing operation. they offer an absolutely everything. is this the right policy response, as far as you are concerned? >> to answer that question, i would have to say yes here did remember, this is a central bank that has been struggling to boost inflation and inflation expectations. that is what all of this is about. growth is not so much the issue in the eurozone. it is much more about inflation. they do not really want to end up in a situation that we saw in japan for many decades. so they are doing more. this is certainly required. but two highlights. one, are they going to convince the market that there is more to come?
remember, mr. druggie has a much tougher job than the bank of japan because -- mr. draghi has a much more tough job in the bank of japan. stephanie: hang tight. i know guy is jumping to get in here. guy: if you are running deutsche bank and you have concerns about negative rates, what is there in them out?will help --re are your of pain banks where are european banks sitting at this? cut, asanother rate welker. we have an extension of the qe program. there was a lot of concern going into this press conference. where is of the story for the banks? where is this transition mechanism being fixed in the announcement? short-term, if they
check out stock prices, it is up 4.3%, a big rally across europe. the cac 40 is up 3%. the dax is up 2.5%. it is a big equity rally, nevertheless. guy: it is, and maybe that will help out. spreads will tighten up as a result of this. it should be pro-equity, good news. you are sort of seeing that reflected. but there is this idea that the deposit rates will be negative for banks, and you have this confused transmission mechanism story that you want to get money out into the real economy, and maybe this is why they are doing the qe story. then there is the banking sector. you have the depot rate, and the banking sector does not act to the good of the bigger economy. so maybe it is the qe story
circumnavigating that, buying credit directly. maybe that is how you get around it. i am sure there will be a press conference on this. >> we just heard from jess staley of barclays. he said the biggest problem is low interest rates, and that is putting downward pressure on profitability. this will not make the bank situation any stronger or better. it: i would not have thought would review get the curve going a lot faster. you see how a lot of the japanese banks react to this. i do not think it is quite as bad as maybe the bankers are making it out to be. great.tter curve is not that they haveng tightened the corridor up a little bit in terms of negative rate stories. the depot rate is going down, but they're also lowering the refi rates. so that is interesting, the
comparison between those rates. stephanie: stocks are zooming up over 2%, all 19 groups. it is not necessarily a surprise. ont: it is incredible risk right now. you see gold selling, stocks jumping, euro following are the german two-yield soaring. what i thought was interesting here did they are going to buy corporate debt, let's look at some corporate debt and europe. we see some of these bonds really rallying. chrysler soaring, matterhorn technologies, galapagos holding spear does this make a big difference in some lawns and not others? what are we talking about? help use: also come understand, did they have limited options of what securities they could buy? could they not by german bunds? point, we are key
going to have to wait for the press conference. this.b tends to do the an ounce of policy like this, but then we need to see the details. -- they announce a policy like this, but then we need to see the details. we have to hear about the deposit rate. this is where the impact came through in japan. the situation in japan is very different to something like denmark. i think that press conference is going to be very important. and on corporate bonds, what will make it end, and how the market responds will come out in the press conference. jonathan: we know how the markets responded. spotdollar, one dollar zero. 30 minutes away from that news conference over in france. we will have it right here on bloomberg tv. ♪
mario draghi speaks in 30 minutes. laggingconsumer price the most in over 18 months. signs of hiring momentum in the states -- a fresh report on the u.s. economy initial jobless claims at 8:30 a.m. eastern. ♪ stephanie: it is the second hour of bloomberg go. so many numbers to digest. bloomberg does it best. great to be here. and davidjon ferro westin big morning. david poppa and it is not over yet. a press conference to look forward to. jon: the big difference from -- i spent a lot of time with ecb policymakers, and
they spoke a lot about how much they would do. this communication effort is quite remarkable. the market, they do not talk to it that much. toid: so we have a lot cover. oppenheimer funds portfolio manager is here to help us to he is a big column out today. first, let's go to matt for market check. matt: first, the euro and a german two-year. that was recommended. here is that euro, big move, down 1.5%, as the policy divergence is highlighted. look at the german to you see that yield shoot up. it looks like investors are selling out. we do not have that. go ahead and look at my terminal. newve my gmm screen, a bloomberg function. gmm go. i have chosen western europe, to
look at a basket of equities and sovereign bonds. amazing moves here. euro stock up 3.5%. the cac up. belgian up. look at the sovereign bond. here is with the biggest moves are tiered what it is showing me is the biggest moves away from the 90-day mean. we are seeing a massive leap in debt with ther yield down 16 basis points, 1.39. the massive leap in an italian 10-year that. a massive leap in irish 10-year debt. the weakest countries are getting bought up the fastest. .dx shows you corporate debt i will take it to european to see which bonds are getting bought up. the weakest players here. .lencore getting bought up deutsche bank getting bought up. stephanie: remember, all of those at the bottom will be pulled higher with a
high-quality bonds. it is amazing, because all of the stuff that you thought, maybe there is not enough high-quality government bonds for the ecb to buy, guess what, now they are in corporate debt. matt: you remember me showing the jon ferro index the other day. they cannot buy anything that is yielding less than 0.4%, and that is a lot, right? they were limited. matt: absolutely. but do you think when core and deutsche bank, standard chartered, wanted the ecb to come in at by their debt and help put a floor under them? maybe a little bit. right now, i am going to go get the first word news. days before the florida democratic primary, hillary clinton and bernie sanders are speaking out on their positions on immigration. they spent a long time on the issue in miami. senator clinton: i think our best chance was in 2007 when ted
kennedy led the charge of comprehensive immigration reform and we had republican support and a president willing to sign it. i voted for that bill. senator sanders voted against it. >> sanders criticized clinton for supporting president obama's policy of deporting children who arrived at the u.s. border. president obama meets with justin trudeau of canada today at the white house. they will talk about cutting methane emissions from oil and gas wells per the energy industry is expected to fight that plan. the two probably does will hold a news conference later today. you can watch it right here starting at 11:40 eastern time. its says it will not alter revolutionary ideals after of the president obama visits this month. their newspapers is just because cuba is approving relations with the u.s., no one should expect the country to renounce any of its principals per president obama will also meet with dissidents while he is there. our 24s a day powered by
hundred journalists in more than 150 news bureaus around the world. back to you. havea big decision it we been talking about it. the ecb had cut all of its interest rates, and qe boosted to 80 billion euros a month. they have also increased the assets available to buy to debt.e non-bank corporate there is a long-term refinancing operation, a new one, and announced to it i do not know where to start. i am going to bring in guy johnson from our london bureau, our european headquarters. 25 minutes away from that news conference. i have spent time in that room in frankfurt. so have you. what is the first question you would ask drug you today? guy: is the situation in the eurozone as bad as may be this big bazooka with suggested actually is? we are new data and all kinds of things, but are we in a
situation where the economic story is getting worse and worse, and as a result, draghi has passed this? jon: i'm looking at the depot rate cuts at 40 basis points. that was expected. i am looking elsewhere. is that the fluff or interest rates? the qe program, people doubted whether they could increase it. of theybe that is one reasons you're getting positive reaction in the banking sector. tro, and it tell could look like a subsidy. that is another factor. the corporate story is that positive. and you bid the banks on that story. there are a bunch of factors on why banks are outperforming at the moment. att is one way of looking it. the depot rate saw it.
maybe draghi is having his doubts. he has gone 10. some suggested he could go 20 p.m. maybe it is an indication that it is not the best call in the box right now. mario draghi has said he wants to get to 2% inflation, and he will do it before his term is up. all of the numbers are going the other way, if anything. is it surprising he is going to pull a bazooka out? >> it is not. the arguments here are arguments. ratedsition has interior so much, despite so much he has already done. qe has been a success, but that statement is only based on the argument. it is a very important argument. he has over delivered in the sense that he has delivered everything and more of all the elements that were politically
nonsensitive. gone down to 30% threshold is he moves everything that was important. ,ith respect to the first round i think the main objective is the euro anymore. they know they do not have full control. it is about the transmission mechanism, stimulating bank lending. jon: and changes to the credit market. isthe most important element the targeted long-term number. it is credible and goes directly at the heart of the problem. of course, corporate bonds, as well. guy: that is exactly right. i wasgoing to ask if allowed to be a bit less amazed than everybody else. stephanie: we expect that from you. guy: drug he is a brilliant
stage manager, and this is a superbly staged managed event. he managed with relatively little to surprise markets. he has given the markets more than they were expecting. just as we have heard, he avoided treading into politically dangerous areas. that is the question of the future, you know, what is left. how much will this thing by itself achieve? i not so optimistic that it will make it big difference to bank lending. we will have to see. i think the problem is more on the demand side than the supply side. >> we will see. jon: let's not understate things too much. about 18 months ago, you are seriously considering whether you could actually buy a sovereign debt. now we're talking about corporate. you cannot understate that. .> it is a big move honestly, it is not astonishing, because the european economy is slaying.
to be would have had super careful not to disappoint the markets. stephanie: that that is astonishing, given what he did in december. he underwhelmed us so much in december, so the fact that he does this now is a triple wow. not want to disappoint the markets again that would have been a disaster. if he disappointed the market the second time, the gain would be enough for this whole project. they market reaction would be so negative. i want to give him credit for what he did. he is a superb central bank governor, but he has relatively little to play with here. >> i think what jonathan said earlier is key. it is not that what they did in december was poor, but they talked too much and made us believe in would come. i think the strategy of the radio silence today and delivering this -- >> under promised and over
delivered. matt: all the ecb is doing is getting up to where the fed is with its balance sheet. the white line is the fed balance sheet as a percentage of gdp. we have already used this much ammunition, right? so mario's bazooka is helping him catch up to the u.s. as far as the ecb balance sheet. line just changed. it is steeper now. matt: exactly. so now they will surpass maybe. i think the most shocking thing, if something is shocking, is they will be able to buy non-bank corporate debt. that is something that the fed has not done. buying the about non-bank corporate debt? is that because they are running out of sovereign debt to buy? guy: the ecb has a single mandate, and that is close to 2%
inflation. it needs to get inflation up. if you look at the inflation swaps market at the moment, the market is pricing that the ecb will not hit its inflation .arget for, get this, 15 years he needs to start throwing stuff at the wall and hoping it sticks. he needs to pull out lots of different things. maybe this is the start of some of the process, and the market is reacting well to that because it is extrapolating. -- he has an awful lot of work still to do to get anywhere near doing the job he is paid to do. matt: the part you show the other day, one thing you did not put into it was inflation. here is euro-area inflation, and this is number 534 if you are following along at home. this line, this is the problem. they need to get that up, and then now are willing to pull out all the stops spirit stephanie: but isn't the problem also the massive pressure this will put
on the corporate's? at the end of the day, the corporates have to grow and have strong earnings. what if they don't? we're putting a false positive behind them or the fact that glencore is rising, a company that we thought was left for dead a few months ago. >> the banking system in europe is so fragmented right now you are you could be in spain or italy with the same financials of an investment great company in germany, and when you go to borrow money, the rates at which you borrow are so much higher. they need to do something about that. david: is the problem with the european economy the corporations cannot borrow money? jon: i think clive is right. the problem is reversed. it is a demand for funds problem. to can try to accomplish it make money available and to encourage lending activity. but somebody has to be willing to borrow.
in between corporate and households in the eurozone. growths a weak global environment and domestic story and a lot of accumulated debt. so why would i borrow? jon: clive, thank you very much. , thank you. mario draghi speaking live in just 16 minutes. we will bring that to you live right here on bloomberg. ♪
or the u.s. ceo has abruptly left the company. american sales have continued to fall, but dealers had pushed for him to stay on the job or nasdaq has agreed to buy deutsche options market. the transaction catapults nasdaq to the top of u.s. options exchange business, and it may help them pay for a proposed merger with the london stock exchange. the former head of salomon brothers has died. in the 1980's, he was known as the king of wall street for turning salomon into one of the most profitable investment banking firms. he lost his job in 1991 because of a trading scandal. john goodfriend was 96. matt: we have major moves. if you look at my bloomberg first, you can see that the ecb has cut its three major rates in 2011, most often since
all three at the same time. did not cut the depot rate here in 2013 and they cut the benchmark rate and the refi rates. but on december 3, it only cut the depot -- repo rate. with this backdrop, these three rate cuts here and the expansion of qe. let's look at markets. the divergence and policy has really boosted the euro. look at the euro currency against the dollar. a big drop. ..2% right now, down to $1.0871 earlier this week, jon was betting me the euro would rise, and it was around $1.10 your you saw u.s. futures. i think we bounced up a little bit, almost to 1% gain across the board. as of be futures were up 17 points. 128 on dow futures. being a little bit u.s.-centric.
thanuro stock is up more 3% right now. the ibex up more than 3%. the cac, dax, and ftse all showing big gains. here is the stoxx 600 up with a 2% gain, the broader measure. .5%, so noty up gaining as much as what we see happening on the continental. the cac up 2.6%. and the dax.stocks big moves in the debt market. the german two-year, yield soaring. an interesting move for the german two-year, because investors right away sold it off, pushing up the yield. other debt throughout europe investors are buying, especially in the countries of the mediterranean, so spain, italy, and then ireland, obviously not mediterranean but still part of
the acronym there. big moves across the board. i am very excited for these moves. more excited than clive crook, if you can believe it. david: we are here with alessio de longis, as well. i want to go back to the demand question. .e conduct about china cpi takes back up slightly. where will the demand come from? global demand? is it china keeping it going, u.s. consumers? >> that is the biggest obstacle to this plan working. i do not think this will get you to 2% inflation because the demand side, in terms of economic growth and demand for funds is not there. you have global and debt overhang problems. it is not just in the eurozone. it is also in china and the u.s.
i think you need global, coordinated fiscal expansion to create a demand for funds, the willingness to borrow. the governments have to come in and compensate for the funds that the private sector does not want to borrow. stephanie: what should janet yellen do? >> she is going the other way. basically, here is how you get rates up. coordinate a fiscal policy, and we governments around the world will compete for money. .hat will boost rates up i do not think that that is the right thing. i think janet yellen does not need to raise rates and actually needs to be supportive of what is happening elsewhere. the ecb has cut all interest rates. expanded qe to 80 billion euros a month. they expanded the eligible assets available to purchase
non-bank corporate debt, investment great. i am still surprised. they have a new refinancing corporation. should ask this pair but is this it now? it.ell, they can say can. you completely unwind everything you just did are to be clear, the expectations we have into the press conference that they might say, oh, more forward guidance -- i think we are overplaying that. remember, back in march when we started this, it was really open-ended. , but thea day on it expectations card has already been played. i do not think you have to worry about an exit strategy until we get way past 2% inflation here and you also have to play the risk in a measured way.
it,ink we can throw more at but we are getting ever diminishing returns, gains, from it. you need to come in with fiscal policy. that is my view. i do not see how 20 billion more first this 60 we're already doing, and attend basis point cut versus -30 we already had, how we can get a much larger multiplier effect. stephanie: the peripheral banks who are now going to be able to manage their tainted books, they are feeling pretty excited. clive crook and alessio de longis are staying with us. next, we will hear from mario draghi on the key rate decision. stick with us. ♪
what europe needs? recent piece,'s he said the best thing might be to deliver a message to europe's governments here at he needs to send a warning that stimulus is nearing its end and fiscal policy is a larger part. i am assuming you did not expect him to do what he did this morning. does this still stand? >> i did not expect this full panoply of stuff. there are things in here that might be even bigger than they look. but i did expect him to bend over backwards not to disappoint the markets. the stage management is fantastic. he has the instant market response. is this enough to deal with the problem of demand deficiency in europe. i think the answer to that is no. we do need fiscal action in the eu. obviously, that is not something
draghi can deliver. but i think he can put more pressure than he has on to governments to step up. david: just over three minutes until the press conference. will he stand up and say, ok, we have done our part, so now fiscal authorities, it is up to you? that is what the g-20 said. >> he cannot put it like that. he cannot say, you know, i have done all i can do. david: he will be more diplomatic, but he -- will he call them out? >> he can try. central banks said the interest rate can be as low as the interest rates on the deposit ability. put that simply for me. >> it took us a while to digest. it would be the biggest piece of information. since can be,, not will be. we will see how he expands on
that. that is the most important piece. contrary to what was said earlier, that was politically the most of the most difficult thing to push through. banks -- cally paying stephanie: to borrow money. at the end of the day, somebody will be left holding the bag. these european banks have been managing bad assets that they should have gone off their books and they did not. so if you have garbage on your books, you still have garbage. it is another exercise of kicking the can down the road. for asset holders, it is a positive. markets will move up. but this does show what massive problems exist. it will be the first question in the news conference -- what does the word "can" actually mean? >> i am impressed by draghi. even though i am tending to argue and have been for a while
that monetary policy is running into diminishing returns and there is not a lot we can expect from it, i mean, i still have admiration for what draghi has managed to do with this limited set of tools. the stage management of this thing was better. the december thing was a disaster. this has been beautiful. -- he has exactly the market response he wanted it once this is digested, is it going to be enough? the european economy, in the deteriorating while all of this is going on. and the european government is just standing around doing nothing. jon: think about the central bank mario draghi inherited from spirit whattrichet a difference. >> you are setting it up for me because i am italian, right? [laughter] only five years ago, this was simply impossible to mention.
what he has been able to do is incredible. at the end of the day, all the hawks in the governing council have seen that, despite accepting everything has been able to push through, inflation is where it is. the counterfactual evidence he has proved them wrong time and time again. >> brady got for us. >> jobless claims to minute 259,000 for the week. the survey estimate was 275,000. lower than the survey estimate and also lower than the prior week at 278,000. this as if the futures number likely place more of the etb decision, they give more ammunition to the fed that it needs to raise rates. the divergence would be even stronger. here you see the 10 year.
the yield shot of and they came straight back down. on this side of the pond people kind of reactive and decided to stop or to reverse their reaction. moste other side we see debt being bought up over there. we see the euro coming tumbling down against not only the dollar but against global currency. >> watching wirp to watch the futures for a possible rate hike, it still 73% by december. 61% by september. i thought it might react more. be a bitought it would of a curveball. everyone was scrambled and release notes with how we get multitiered rate. then they did this thing with the top refining operation. i'm wondering whether that is where it is right now. effectively we can pay you to go out and lend money.
clive: it depends on the details. it depends what will happen. it's right to put a spotlight on that. that is the think about this that intrigues me more than anything else. the rest of what he did was in the realm of the easily foreseeable. this ltro initiative was not. see.ft the stephanie: he is expected to be on stage. didecember we said draghi things we have never done before and he is also never late. the fact it is so important, his word choices, his tone. the fact we are going to be dissecting an announcement we have not expected and extending this into the corporate bond arena. it looks like banks are being paid to borrow. these are extraordinary times. market participants are going to be paying attention to every key dotted.ery "i"
you are putting corporate in an arena were suddenly there's a safety net on something that maybe should not have that. >> i think everybody is going to be sitting there saying, is this for real? they are reading every letter of every statement. jon: here comes the main man right now. it's investment-grade corporate debt. asterix onking a few that program. ecb headquarters. a whole host of measures. have cut all their rates and expanded qe. they have widened the eligible pool of assets available to buy. they started a new targeted financing operation. the euro is weak or going into the news conference. peripheral bonds are rallying. equities across the board deep in the green.
2.5%.x up by atio draghi unusually late 33 minutes past the hour. let's listen in as the ecb president begins his remarks. mr. draghi: the vice president and i are very pleased to welcome you to our press conference. port -- we now report other beating of the governing council which was attended by the commission vice president. economicour regular and monetary analysis, we have conducted a thorough review of the monetary policy stance. in which we also took into account the new microeconomic
projections by our staff extending into the year 2018. result, the council has decided on a set of measures and the pursuit of its price ability objective. this comprehensive package will exploit the synergies between the different instruments and has been calibrated to further ease financing conditions. provisions,w credit and thereby reinforce the momentum of the euro area's economic recovery and accelerate the return of inflation to levels below but close to 2%. first, the key interest rates, we decided to lower the interest rate on the main refinancing
operations of the euro system by five basis points to zero. the rate on the marginal lending facility by five basis points to 0.25%. deposit facility was lowered by 10 basis points to -.04%. second, we decided to expand the monthly purchases under our asset purchase program from 60 billion euros to it present 80 billion euros. they are intended to run until 2017, or beyond if necessary. in any case, the council sees a sustained adjustment in the path of inflation consistent with its aim of achieving inflation rates below but close to 2% over the
medium-term. to ensure the continued smooth implementation of our asset purchases we also decided to increase the issuer and issue share limits on securities issued by eligible international organizations and multilateral development banks from 33% to 15%. decided to include investment-grade euro denominated bonds issued by known bank corporations established in the euro area that are eligible for regular purchases under a new corporate sector purchase program. strengthen ourer asset purchases to the financing conditions of the real economy.
purchased under the new program will start towards the end of the second quarter of this year. fourth, we decided to launch a new series of four targeted long-term refinancing operations. 2016, each with a maturity of four years. these new operations will reinforce the ecb's monetary policy stance angle strengthen the transmission of monetary policies by further incentivizing bank lending to the real economy. counterparties will be entitled to borrow up to 30% of the stock 31stigible loans as of the
of january, 2016. the interest rate under teltro 2 will be fixed under the life of , and the rate i'll the main financing operations prevailing at the time of take up. for banks is never-ending exceeds the benchmark -- net lending exceeds the benchmark, the rate of flight will be lower. and it can be as low as the interest rate on the deposit facility prevailing at the time of the take-up. there will be no requirement for mandatory early repayments under teltro 2, and switches from teltro 1 will be allowed. finally, looking ahead, taking into account the price stability, the governing council
expects the key ecb interest rates to remain at present or lower levels for an extended period of time it will pass the horizon over net asset purchases. releases with further details of the measures taken by the governing council will be published this afternoon at 3:30. since to the measures june 2014, with today's comprehensive package of monetary decisions, we are providing substantial monetary stimulus to counteract heightened risks to the ecb's price stability objective. low or even negative inflation rates are unavoidable over the next few months as a result of movements in oil
prices, it is crucial to avoid second-round effects by securing the return of inflation to levels below but close to 2% without undue delay. the governing council will continue to monitor very closely the evolution of the price ability over the period ahead. let me now explain our assessment in greater detail. starting with the economic analysis. euro area real gdp growth was confirmed at 0.3% quarter to quarter. 2015, fourth quarter of supported by domestic demand. while being dampened by a negative contribution from that -- net exports. the most recent survey data points to weaker than expected
growth momentum at the beginning of this year. expect thead, we economic recovery to proceed at a moderate pace. domestic demand should be further supported by our voluntary -- monetary policy measures and their favorable impact on financial conditions, as well as my continued employment gains benefiting from past structural reforms. the low price of oil should provide additional support for households real disposable income and private consumption, as well as corporate profitability and investment. in addition, the fiscal stance that euro area is likely expansionary, partly reflecting measures in support of refugees. the economic recovery in
the euro area continues to be deafened by subdued growth prospects in emerging markets, volatile financial markets, the necessary balance sheets adjustments and a number of sectors, and the sluggish pace of implementation of structural reforms. this outlook is probably ecbected in the march 2016 microeconomic projections for the euro area which foresee annual rate and real gdp 2016, 1.7%by 1.4% in in 2017, and 1.8% in 2018. with the december 2015 euro system microeconomic projections, the outlook for real gdp growth has been revised slightly down.
mainly reflecting the weekend growth prospects for the global economy. the risk to the growth outlook remained tilted to the downside. toy relate particular uncertainties regarding development in the global economy, as well as to broader geopolitical risks. estimates, euro area annual hicb inflation was -.02% in february 2016 compared to 0.3% in january. components --ee hicb components contributed to this decline. how the bases appear in futures prices for energy, inflation
rates are expected to remain at negative levels in the coming months and did pick up later in 2016. thereafter supported by monetary policy measures and the expected economic recovery, inflation rates should recover further. the governing council will closely monitor price setting behavior and waits development in the euro area. paying particular attention to ensure that the current low-inflation environment has not become entrenched in second-round effects on wage and price setting. this broad pattern is also reflected in the march 2016 ecb stockmarket economic projections for the euro area which foresee inual hicb inflation at 0.1%
2017, and 1.6% in 2018. in comparison with the december 2015 euro systems stock market economic projections, the outlook for hicb inflation has been revised down, maybe reflecting falling oil prices over recent months. turning to the monetary analysis, recent data confirmed solid growth in world money with the annual rate of growth standing at 5% in january 2016 after 4.7% in the summer -- december 2015. annual growth continues to be mainly supported by its most liquid components with a narrow
-- one growing at an annual rate of 10.5% in january after 10.8% in december. continue the path of gradual recovery observed since the beginning of 2014. they annual rate of change of loans to nonfinancial 0.6%rations increased to injanuary 2016, up from 0.1% december 2015. developments in loans to enterprises continues to reflect the legs relationship with the business cycle, credit risks, and the ongoing adjustments of financial and nonfinancial sector balance sheets. loansnual growth rate of to households remained stable at
1.4% in january 2016. policy the monetary management is in place since june 2014 and have clearly improved conditions for households. a crosschecked of the outcome of economic analysis signals cigna goals -- coming from monetary analysis confirms the need for further monetary and demi was -- stimulus in order to return inflation rates to levels that are below are close to 2% without undue delay. policy is focused on maintaining price stability over the medium-term. it is a -- reap thea noted to
full benefits of our voluntary policy measures, other areas must contribute. high structural unemployment and low potential rotput growth in the euo area, cyclical recovery should be supported by structural policies. actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure are vital to increasing investment and boost job creation. an effective implementation of structural reforms in the environment of a monetary policy will not only the two higher sustainable economic growth in the euro area but will also make the euro area more resilient to global shocks. as indicated by the european commission, the implementation
of countries specific recommendations continue to be fairly limited in 2015. reform efforts thus need to be stepped up and the majority of euro area countries. fiscal policies should support the economic recovery while remaining in compliance with the fiscal rules of the european union. limitation ofnt the stability and growth pact is crucial to maintaining confidence in the fiscal framework. at the same time, both countries should strive for a more growth from the composition -- friendly composition. we are now at your disposal for questions. >> mr. president, my first the forwardabout
guidance you have given where the rates of the lower for the long time, after the end of asset purchases. new --duration of the this will also extend past the -- if i'm not mistaken. my second question would be when low can this, how be? i know this is changed a lot in the last few years and new horizons of open for monetary policy. do you have any idea? are you approaching a limit? do you still have room to go? draghi: on the teltro, i can
give you a brief overview of what this operation. keep in mind there will be a press briefing at 4:00 today. it will be for the further technical details you may be interested in. 's are reap -- refinancing operations that provide loans to bank with maturity and banks are given additional incentive to lend on the funds received, the key features of the following, we will awful -- offer four operations, one each quarter starting june 2016 until march 2017. the maturity of the operations will be four years each.
the last teltro 2 will mature in march 2021. banks will pay the mro r at the time of biddingate. right now it is zero. reduction of get a that rate which increases with the amount of loans they grant. the maximum reduction will bring 2 torates on the teltro the level of the deposit facility rate at the time of bidding. borrowunt that banks can is late to the amount of loans they have other balance sheets. they bank that is active in granting loans can borrow more than a bank that concentrates on other activities.
is inll list of features the press release that will be published after this press conference. why did we decide to have another series of teltros? some of the main reasons are low growth in the euro area being recovering for quite some time and it is still too low. teltro 2, and we haven't good -- had a good spirits of 2 willst teltro, teltro further ease private sector credit conditions and stimulate credit creation. this is quite important now. it provides funding certainty. it is four years.
at an attractive price in an environment of increasing volatility. and also an environment of large upcoming bond redemptions, bank bond redemptions. banks face sizable forthcoming from the needs, this occurs in an environment with a pricing of bank tax is volatile and uncertain. we think that in conjunction we go the other measures standard and nonstandard in place. it will return inflation rates to an objective of" below 2% over the medium-term. thank you. i'm sorry? yes. how low can we go?
low, very lowstay for a long period of time and well past the horizon of our purchases. from today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate it will be necessary to reduce rates further. of course, new facts can change the situation and the outlook. let me also add the experience we had with negative rates as a very positive and easy financing conditions and in the transmission of these better financing commissions to the real economy. aware that -- there
are different views about negative rates have affected her how the effect profitability of the banking system. we can discuss this later. let me tell you. it does not mean any negative rate will be positive. it does not mean we can go as negative as we want without having any consequences from the banking system. the answer is no. we can discussow for some time the possibility of having a tiered system. in the end the council decided exactly for the purpose of not signaling that we can go as low as we want on this. is basically, although he gives a positive judgment about past experiences,
it's aware of the complexities in this measure. before, we think it would have numbers that show that the aggregate profitability of the banking system has not been hindered by the experience wehad with negative rates can comment on that a great length. it's an aggregate and banks are not in the same position. it is not mean this week your forever. the bottom line of this is basically more and more of the emphasis was shifted from raising instruments to other nonconventional instruments. this.nal word on he remembered that negative
rates were introduced for one specific reason. when interest rates reached the zero bound, the expectations for the future rates in the long-term are only that the rates can go up. with negative rates we were successful in taking these expectations down. to the extent we have other estimates to do this will certainly shift the emphasis. we have shown that through our ecb purchases, we have done that. thank you. >> may ask the vice president to comment on is use the profitability of the banking system? >> the main point is we have to consider a general equilibrium approach. it's not just taking one particular thing and drawing the conclusion that our policies
would be creating problems to the banks. regards the net interest margin of the banks, what we see for last year, a year during which there were already negative rates in the facility, there was an increase in the net income margin in the relation to the total assets of the banks. or, -- on average the president referred to. this is important because it is not just about the volumes, because there was some increasing credit. it's about the average rate in relation to total assets.
this reflects the fact that one of the consequences of negative rates is to decrease the funding rates for banks. the whole set of rates in the money market, the short end of the interest rates came down as a result of the negative rates. the banks that used money markets to fund themselves had a much lower cost. then there are other effects of our policies. the fact that negative rates push down the whole curve because by opening up the possibility in terms of expectations for future rates, the race will be very low. the whole yield curve is lowered. lowered,s if it's there are capital gains. the reverse of this is that the price of all the securities go
up. therefore as a result of our policies. the other thing is that models we canur demonstrate the growth of the economy was higher than it would have been if we had not taken those measures. which means the reduction in costs that the banks incurred last year are due to the continuation recovery of the economy which we help with our monetary policy. --s reduction was an element to go up for 3.8 in 2015 the 5.7 last year. 5.7me remind you that the
is also in real terms because inflation was zero. this is the more general analysis that has to be really considered to win the question of impact of our policies on banks profitability's is discussed. >> by how much do you estimate that the adjustment of the issue limit in the inclusion of corporate bonds into the tv program, and how confident are you this will be big enough now you can comfortably implement the program without either running into constraints are having to adjust the parameters of the qe program again? the second question, on the
forward guidance would it be fair to see a link between the time you expect interest rates , to linkow or lower that to the maturity of the annual liquidity operations? thank you very much. >> thank you. we are confident that our decisions today are changing the parameters and will provide the necessary boost for adequate operations of 80 billion euros a month until the horizon is specified. that is the answer. that is the answer, i think. 80 billion euros per month for the horizon. -- what wasoint is the question? the same question about teltro.
i'm sorry, what was the second question? >> [indiscernible] united states interest rates to move up over the next four years. >> there is no relationship. reporter: you said you ruled out using a tiered deposit rate system because he wanted to send a message about negative rates. we are lower bound on the deposit rate or could we go negative from here, even without a tiered deposit rate? assets that are not specifically banks. can you clarify what assets can be purchased under that program? thank you. >> thanks.
the answer to the second rateion is the investment of nonfinancial companies and the committee looks into the specific definition of the company's you mentioned -- companies you mentioned. we have not made a decision today. the committee is looking into this. on the first question, i think i answered it. i have answered before. decisiony, the final of not having a tiering system was not only the desired not the signal that we can go as low as want, but -- as we the complexity of the system is remarkable in a country, in an area like the eurozone with many banks of different sizes, different conditions, totally
different market situations. the desire to not signal and the inherent complexity in that. i think i've answered to the questions. >> mr. o'donnell? hello.r: quantify be able to the size of the corporate debt market you are talking about buying into it perhaps also about the size of the take of you would anticipate for tltro 's. and had you expect additional 20 billion euros of monthly purchases? tltro's, does the that remain a concern of yours going forward? mr. draghi: from either a
different instruments is first the potential volumes they can be mobilized and the corporate bond markets. would defer to the press briefing later on and set of guessing numbers right now. just say that the number of 80 billion includes that. that the nevert can be achieved without further changes. the other thing. demand.are up to the we came from a successful screens with tltro 1. we expect a sizable update. it's fragile and continuing. it's gradual. but it is continuing.
even the very attractive conditions that are being put in place with these operations. when we discussed these issues really one does not have in mind a specific country. you just have the eurozone and what you do is achieve stability in the eurozone, now with the specific country in mind. >> ms. jones? he noted in your opening statement that the measures announced today its like the synergies between different instruments. could you explain a little bit more about what you mean by that? and i don't quite understand the point about tltro's not being some sort of guide for what is
going to happen to interest rates in the year ahead. you have described the system is being one where banks can come in loan up to 30% of their fours for a period of years and 0%. under those conditions would you not expect short-term interest rates to fall to near zero at 2020? if that is the case, and i had misunderstood, is that not removing some ability of your successor to be able to implement short-term rates during the first year in office? the first question is about synergies. the package is characterized by two different sets of actions. one is the general easing.
namely the cut in the deposit facility rate. the sizable increase in the monthly purchases, and the forward guidance. then you have a second set of options which is basically the telstra --mr. draghi:. there's also other remarkable news which is the broadening of the assets we are purchasing to the corporate sector. all these actions actually complement each other, both increasing the amount of upward financing and making financing conditions easier for the whole economy. attacking different points of the real economy. and favoring the pastor from the banking system to the real economy. we do expect substantially easier financing conditions to
the various channels. lending andcreasing increasing and the bank bonds refinancing. substantially easier financing conditions for the banks and for -- that are strong synergies between all parts of this package. the second question i can not sure i understand. pay the mro rate at the time of bidding. they pay zero now. if it were to change, they would pay at that point in time. -- i'mse they can also certain? it is not indexed. exactly.
they pay the mro at that point in time. then they make even get a reduction of that rate. the maximum reduction would bring the rate on the tltro 2 to the level of the deposit facility rate at the time of bidding. a bankderstand well, that borrows now would pay the mro of zero. suppose actually go up and satisfy the benchmark lending. then they would get with the deposit -- facility rate is today. that is how it works. please -- >> to add something to that of course. that is the way it works. thepoint on your question, mro rate is paid now during the 12 month operations will be
launched. that is not have any impact in a possible increase in mro rates down the road. three years from now. there is no connection between the two things. that has already been paid by the banks when they borrow. then the situation hopefully will improve so much in the euro area that rates can go up. there is no obstacle created by the mro's. that was the point of your question. reporter: [indiscernible] operations they will 2, whennder the tltro they draw, when they get to the facility which would be launched
in the quarterly operations. operations.s, four 12 months from now more or less those four operations are launched. reporter: this is a really technical questions is something more basic. i ask regarding unanimity of the vote -- i'm sorry. today.e of vote due to the principal flotation. was it unanimous to adopt this bunch of nuclear weapon measures? even though we had
this rotation system in place for quite a while and has not made any difference in terms of our discussions. everybody vote or no vote expresses his or her viewpoint. you listen. things are are changed in the course the discussion regardless of whether one was a voter or not. there is substantially no difference. and the adoption of of the decision, i would say the majority in favor has been overwhelming. response -- let me incidentally add one side remark. you are aware that there was a wisdom towards the actions of central banks and
also with respect to the ecb. there are many reasons but one of them was the willingness of the ecb governing council to act. the discussion today and the overwhelming majority with which the package was approved makes doubts about the willingness to act. verys all in all a reassuring discussion, very positive. second question regarding the forward guidance from the other point of view. there is an interesting sentence , after ast governing period shooting of undershooting --
in a limited time they could be overshooting. to what extent could that be the view? one could interpret this like it could remain in a very -- stance even when it exceeds the 2% threshold. innovate over aces strategy could be triggered at a later date and nobody can say. i can't really comment on one view. what i can say is that it's defined as reaching an inflation rate which is close to 2% of below 2% in the medium-term. have two towill five medium-term that the inflation rate was for a long time below 2%.
it would be about 2% for some time. symmetricint is it's and the definition of the objective of price stability over the medium-term. reporter: thank you. mr. president, he said the aggregate affect of the negative deposit rate on banks is not so negative. some are presented its of retail banks see their business model in danger. what would you argue on that. , excessiveuestion debt in private and public sectors seems to make it very the transmission of monetary impulses into the real
economy/ why should the decided measures today make a difference on that? you are absolutely right. banks are not the same. modelanks have a business which exposes them to the negative rates more than other banks. if they have a structure for funding themselves says that it's affected by negative rates, more than other banks. on the other hand there are other banks where they can easily adjust their funding structure. you have situations where deposit rates are set at the minimum by law. to this extent negative rates cannot be passed to depositors.
i perfectly understand the viewpoints expressed by this sector of the industry that you refer to. the point made by the vice president and myself was referring to the aggregate situation. as of the banks are complete different that suffer from negative rates for other reasons. they have a structure that it up pretty well to the negative rates, but on the other hand they had given mortgages and loans often that are indexed to the arrival. as negative rates break down to negative territory, you see they are -- thei mortgages produce a loss unless the richer specific -- high enough. you have two different sets of
banks. the banks of the spreads are sufficiently high and can afford this effect on their assets. but there are lots of fakes -- banks that are not sufficiently high. it is one more reason to thatder the negative rates are somewhat complex and multifaceted banking world we have the eurozone. if i cancond question, rephrase, how can an expansion in monetary policy or a set of measures like we decided today, how could change the situation or debt both public and private is excessive. let me give you the opposite example. suppose we were not to do this. suppose we would let -- we would give up. i said last time we don't give
up in our fight to bring inflation back to our objective. suppose you were to give up and rather than having inflation unit deflation. , one of thelation most negative effect is to increase the real value. the real weight of debt. to this extent expansionary monetary policy measures like the ones we decided today are actually a very positive effect in using people to reduce debt and not increase it. reporter: you announced a package of measures that is very broad. more than what was expected. he said is mainly based on these inflation forecasts and the
result of cheaper oil. is this package an overreaction to temporary low oil rises? somecond question is investors have expressed that the policies are getting less effective in social base are running out of tools. what would you say to those kind of criticisms? which major tools you have left? the answer to the first question is it is not an overreaction to low oil prices. it's a reaction to the fact that conditions have significantly changed since our last monetary policy measures were taken in early december. this change was due first and foremost to a significant weakening of the global growth prospects.
incidentally the imf announced outlookey will -- their for global growth. this is one reason. the second reason is the financial conditions have changed considerably in this period of time. there has been a widespread volatility of high-intensity for the reasonably long period of time and that intensity. and has been heightened tightening of financing conditions. all this -- these are the two major changes. also the oil price which first fell and then went up again, but still they are in a zone where they are consistently lower than a year ago. package is not an
overreaction to prices. if the adequate reaction to a andening of the growth price stability prospects. your second question is about the perceived lack of power in central banks. it allows them to address the other two sources of pessimism as far things are concerned. one is central banks have no ammunitions left. central banks have no policies. but i think the best answer to this is being given by our decisions today. it is a fairly long list of measures. each one of them is very significant and advised that the themum impact into hosting
economy and their turn to price stability. --have showed we have not we're not short of ammunitions. yes, you're willing to act. yes, you have ammunitions. but no matter what it will be ineffective. that is quite interesting because first of all we have growth todata from easing financing conditions. to what happened to the credit flows in the euro area seems to be stagnant taking these measures. wise, spread-wise between wee countries and periphery,
can quite rightly say today that fragmentation which was the measure problem of the eurozone until two years ago has now disappeared. it's presaging large corporates have narrowed down considerably. all these translated -- transmitted into a growth recovery, which is not spectacular but it is there and traffic -- continuing for several months. that is the basis. they would say you have not reached her inflation target. yes, it will take time and it will take time because it would be foolish to think we go back 2%inflation of 2% or below with an economy that has not recovered yet. in order to get to our
objectionable -- objective price stability, we need the economy to recover stable for the euro area. then you will see the outward gap will gradually close down and we will start seeing movements on wages and prices. that is very important. we have not seen it so far in any significant way. we have seen something in specific countries. then we will see the return back to the inflation objective. and there is a matter of observations to make. acted. we had not whatppose we had embraced i used to call policy strategy/
aligns with the factor in the beginning? unfortunately not. i cannot give you any number. what i can say is that the current fiscal stance is mildly dispassionate. it used to be neutral last year, viewpoint,from this it is one of the drivers of this economy. economyr driver of the and it remains with monetary policy. then, we have the oil price. , we have some mildly expansionary fiscal policy.
>> thank you. first of all, you already mentioned that you are shifting to the measure you mentioned. this includes helicopter money. either in the form of direct financing our public investing is the four -- in the form of direct money. when the bank of japan voted for , specifically, members of voted against because they see the global race to the bottom in terms of interest rates. is that a view you share? what will be the monetary policy worldwide?
say, we have not really thought or talked about helicopter money. it is a very interesting concept that is now being discussed by academic economists in various environments. the concept involves complexities. both accounting wise and legalize. termurse, they helicopter might mean many different things. so, we have to see that. , let me say what i said in the beginning. and aoday's perspective, into account the support of our managers the support of our , we dos of the objective not anticipate that it will be
necessary to reduce further rates. , new facts can change the outlook. that is what i said at the beginning. i will say it again now. finally come your question was about the worry of the general worldwide money expansion. i see. i see. our view of that is the calling. ecb has neverthe started anything like that. are our measures today entirely addressed to our economy. our domestic economy. them -- some of the yielded to loring of others. some are geared to expand domestic credit. war.e not in this
also, let's not forget, in the , all countriesi entered a solemn agreement that basically, they would avoid such war. some ofis true, that the measures spill over on the foreign exchange market. it is a very different thing between saying that we have increased the size of our --chases from 60 60,000,000,000-80,000,000,000 euros. and that we will purchase and foreign barlett -- foreign currency assets. that is intervention. thate are not in environment. >> we have one last question.
>> thank you. i'm from the new york times. tro, as iear tell understand it, is certainly becomes a negative rate. if i'm not mistaken, it is unprecedented for the eurozone. door to aening the further expansion of the negative rates. can you see that going into other categories? , you mentioned deflation. i wonder if you could just clarify. we have really not discussed this. we believe the measures we have taken today are adequate to address the change on the line.
it is the last monetary policy measure. second question is, are we and deflation? the prediction shows the it will be negative for several months this year. but the years and come it will go up again. a sickly, because of our monetary policy measures which will create expectations so that inflation will return to the rate of inflation. horizon, andhe other words, the time it has taken to get back to the objective is now longer than it was. havedoes not mean that we
deflation. this isr words, substantially different than what it was in the 90's. what to say? before you close the press conference, there is one thing i believe it is quite important that i should mention. to the banking sector, the eurozone banking this is quite important, i want to point out your attention to a communication by the commission. something that was distributed this morning. , it does clarify the nature of the pillar requirements. and, this communication opens the ready -- way for the clarification of supervisors for
the implementation of measures that determine the maximum distributable amount. thank you. >> thank you. that wraps up another historic meeting from the ecb president taking the bank into more uncharted territory. let's talk about that meeting with some of the measures. they are taking it from 60 billion euros a month to 80 billion euros a month. they are cutting the basis points down to zero. that takes it down to -40 basis points. they are changing the pool of assets to include non-bank corporate debt. that was a big move. they also unveiled a new financing program for the banks as well. let's start with market reaction. broadened ther
news conference. here is the kicker. draghi does not anticipate the basis on the current view. border.f the we look at the front and of the eurozone debt market. spanish two. the euro two yield is up six basis points. very negative. this is what he is saying. he was expecting a euro rally. he is expecting the german curve to selloff. it looks like he is reluctant to take rates any further. he is anticipating not doing that. switch of the border. the move in the nfc market brings the tax up 3%. now, it is up 8/10 of 1%. we had a rally in the financial. it. the index 1.76%.
the market turkey news conference at it -- as a disappointment. the big story that. we have the team here. westin,e ruhle, david we bring out the photos and flight crew. over the city of london, sky johnson is standing by. eric nelson. i was wondering when he would judge the potency of the less 90 minutes. >> we have an number of factors that work. i want to take you inside the banking sector. they have the super sector. what you are seeing is the bank with the highest funding. that ist surprising what is happening. it is really about how you fund your loans. it is very important.
the london market is actually lagging a little bit. me bring in the unit credits as eric nelson. on what thefocus objective here was. they have made a lot of comments about the negative rate having a zero-sum effect. you are view is that this has targeted at denting lending going. >> the way i read it is in the following. the last few months or year, it thiseen on an epic scale is changing. they are going straight out in trying to jump the signal. more importantly, they're making money at zero and even negative rates. to this has changed through
a truly domestic demand. this is important and positive. >> alessio, you said this earlier. he said this is about the underlying fundamental academy. alessio: exactly. this is the realization they should have done. i think they did the right thing. they did everything they can. their target is as narrow as possible. a package for the market. it is a package for the bank, for lending, for the transition mechanism. stephanie:. what good is flooding the market with more euros? alessio: exactly. that goes back and a houthi: included the statement. it is about mindful fiscal policy that is pro-growth.
and, he sent a clear message. interesting about what he said about the reluctance? reluctance to go further into negative interest rates. clearly disappointed the market. it drew back some of the benefit in terms of the booster expectation. we want to hear from eric. erik: talking about the liquidity, you have to remember that there is a regular trio of delays. banks have a lot of cheap money. when you go further out, it starts to get a little bit different. that is what he is targeting. this idea that show the regulatory storage. you borrow money cheat and lend it out further down. what he is trying to do is solve that problem with the banking sector.
>> of banks our a rich. not liquidity rich. just take short money and lend it out. so come it have all of these pockets. the bank with their own funding curve is steeper than the corporate's. it makes it impossible for a bank to borrow. that is being addressed by the ecb sector. exactly. david: this is pushing a lot of strings. there is not money there to lend. the problem is that people do not want the money? the money easier to loan it does not solve the problem. alessio: the demand is not as large as the supply we are generating. we are generating 80 billion a month. january was a big number. so, if you look at it on the
bank lending site, private growing more is than nominal gdp. there is that new leveraging. >> what he would say is that there are many small documents. one thing that is refinancing is where there is a bottleneck, that relieves the problem. with the margin, you expected to generate extra lending. this is not an instrument for leaning on macro demand. that is part of what the ecb is running out on. is he admitting that december was a mistake to say that these measures have averted a disastrous disinflation? how do you use the word disastrous?
basically, it says slow and steady. alessio: what he alluded to in the beginning was that he aimed at doing the calibration in december. i think that he overpromised. when you go through the months , it is up to the meeting over three months that we have had now. that is where the mistake was in terms of how december was a mistake. not in delivery, but preparation. >> we will go back out to you in london. to bloombergogs in right now and judges the potency ,f this package and frankford based on what the market is doing right here, what would you tell them? i would say it has been a successful communication strategy. they have been very tightlipped.
the objection was to draw the euro weaker. they wanted to put in place something that could address the poor numbers that they referred to. particularly, he asked if you put on the string. what is the cost of lending. the low lending rate, the lending volume that is coming out is still done at a very high rate. of the change it because regular liquidity provisions that there were just talking about. they push the funding cost and the high-end of the games. intentionally be addressed by two that today. depending on the details we learn this afternoon. you curious about what think the effect on the behavior of the european banks will be. it strikes me that the way this was set out a sort of giving you your gunsto stick to and make loans. enough folks on the other activities you have. will it change their behavior?
>> yes. in a sense. i do not know the bank, even if you look at the banks and say there are investment banks and there are old-fashioned commercial banks in a very sophisticated way and investment banks are, the europeans want to deal with the american competition. the old-fashioned is the corporate sector. including our own. this issue of continuing facing the money inside the eurozone. you have to follow-up these curves which have steep and because of the regulatory strangulation. like of a better word of the banking system. that has really increased the borrowing cost. signed correctly or smartly, i hope it is, it could be the first important step. >> i want to go back to the bloomberg. this is not a move from
the ecb for the market, but for the transition. dot they're trying to obviously, as get banks to lend more to jumpstart the economy. qe has not really done that. here's a look at the market i tracked. non-bankst liquid corporate debt issues traded in europe. this sub investment grade. what mario draghi's move has done come you can see how is spiked up. it has been very risky to invest in this. very expensive to insure the debt. what mario draghi has done is brought the cds down. it made this debt much less risky to invest in. and getan go in businesses funded. they can make it through any kind of slum. make ite: if they through this, what are they getting to? they will survive.
will they thrive? if they do not thrive, then what? what will we do? one more time. >> i am not a judge of this. were saying his panic signifies the beginning of the end. people who are skeptical like you. as journalists, they say hey. maybe these companies it should start with a debt to begin with. still, they are not fit enough to survive on the other side. alessio: a lot of people wonder if they can increase the program. rule-based asset program. morning, tove this actually do something is the issue share limit.
is that argument dead in the water now? i think that is a good move. here's the number one problem. we have seen, we wrote about this earlier, nobody took advantage of the fact that it has been compressed. in america, you had a direct effect mortgage. this beats the curve of risk. that is where the mistake lies. surely they could buy more. they could buy something less than the highest rate. they could even buy equities. i completely disagree to the statement before that they are running out of firepower. the only restriction on firepower is the preliminary one.
the ecb can do whatever we want in the mandate. it is only what they judge to be necessary. they deal with the reality of it. people thought that qe was beyond the political aspect of the europe. when the need changed, it did not. it is the beginning of the show that they can do more than people thought. >> 19 years ago we did not have an ecb. >> that is a nightmare. >> today was not a nightmare. stephanie: what an extraordinary conversation we had. and london, we have alessio de longis, great to have you all with us. we are not going away. stick with us here at you are watching "bloomberg ." ♪
extraordinary morning. rate cut in the corporate world. it is a wild day. is that iti will say is not surprising rate cut. it is the fact that they went back on corporate debt. this new financing program for banks is that if you do lend a lot, you will get paid. david: we have been talking about going through to the real economy. if you think you'll get a structural reform, the team is stepping in. big day tomorrow. from bloomberg view. they join us. ♪
from bloomberg television. vonnie: we want to go from london to frankfurt in the next hour. ecb president unleashes a comprehensive stimulus measure. will it be enough? mark: and an exclusive. we will hear from the chief executive hunter harrison from his farm in connecticut. we will get the latest on his deal wealth northbrook southern. andie: former ceo john mack died at the age of 86. we will up back at his amazing career. desk go to the market where julie hyman has the latest. julie: i will s i