Speaker 1: This is Bloomberg Surveillance. We want to give that credit.
Speaker 1: They have come a long way from where they were
Speaker 1: in the yearly nineties when they didn't even communicate anything
Speaker 1: to the market. Begin remains the most important single occasion currency,
Speaker 1: that together with Aussie which I think is the proxy
Speaker 1: for all of Asia's growth ultimately, and we still are
Speaker 1: going to have a crisis at some point. It'll be
Speaker 1: a big one. And that's where the new tools and
Speaker 1: dot Frank the title to the Resolution Authority, that's where
Speaker 1: they come in. Bloomberg Surveillance your link to the world
Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning everyone,
Speaker 1: Marrow Draggy shakes markets. He moves markets and it is
Speaker 1: risk on. Futures up twenty JABB futures up one sixty three,
Speaker 1: the Euro weaker. What good coverage this morning. Will continue
Speaker 1: that into this eight o'clock our bonus round, joining us
Speaker 1: Dennis Gartment, who has a few opinions on as we
Speaker 1: love to have Dennis Gartment on the the hate me.
Speaker 1: The hate mail meter lights up like a like a
Speaker 1: candle when we have Gartment on this is well, they
Speaker 1: love Dennis, they hate me, right we'll get Dennis Gartman
Speaker 1: here in a moment. Bloomberg Surveillance this morning marched by
Speaker 1: cone Resnick Accounting, Tax Advisory. As economic policy changes, so
Speaker 1: do business decisions. Speak to the experts at cone RESNUC
Speaker 1: for the forward thinking advice you need. Find out more
Speaker 1: at cone Resnick dot com. O h n R e
Speaker 1: zy n I c K cone Resnick dot com. Dennis
Speaker 1: Gartman joins us out. Dennis, I want to put this
Speaker 1: in the in the context of the title of Larry
Speaker 1: Lindsay's new book, You Give It a Massive Rave Review,
Speaker 1: Conspiracies of the ruling Class. Mario Draggy is part of
Speaker 1: the ruling class. What's his conspiracy to jump start his Europe?
Speaker 1: He has leaked full hog into into the market this morning.
Speaker 1: In case people haven't heard yet, what they have done
Speaker 1: in Europe this morning is cut all three of the
Speaker 1: base rates in UH by the ECB. More importantly, have
Speaker 1: raised the sixty billion euro uh quantitative easing each month
Speaker 1: to eighty billion, And I think probably most importantly, have
Speaker 1: allowed the purchases of corporate debt for the simple reason
Speaker 1: that they're running out of sovereign debt that they can buy,
Speaker 1: and they have no choice but to expand reserves by
Speaker 1: buying corporate debt. The Euro is getting slammed as we talk,
Speaker 1: treadty five right now, down from one o nine actually
Speaker 1: trading one tena one time earlier. This found a bid,
Speaker 1: I mean, is where we're going to? Dennis and Mike
Speaker 1: McKee might jump in here with Mr Gartman. Neil Dutta
Speaker 1: just publishes March and April are a no go for
Speaker 1: the US Central Bank, while June is a live possibility.
Speaker 1: Michael Dennis. The real question is obviously Mario dragging went
Speaker 1: uh full Monty as Brunelo Rosa said, or kitchen sink
Speaker 1: as Jamie McGee or and Jeff Black have both tweeted
Speaker 1: this morning. So you get this reaction in the markets,
Speaker 1: But does it last? Is there going to be enough
Speaker 1: stimulus so the market is going to see enough in
Speaker 1: the package over the next couple of weeks to continue
Speaker 1: pushing down on the Euro. Yes, of course they will.
Speaker 1: I think Joggy has made it abundantly clear if this
Speaker 1: is not the last move he's going to make. He
Speaker 1: has thrown in completely with those who are expansionary, I
Speaker 1: think justifiably. So you still have unemployment rates among youths
Speaker 1: in Spain, Italy, across all of Europe. I don't think
Speaker 1: he had any choice. I think he's done exactly what
Speaker 1: he needed to do. It will be, or should be,
Speaker 1: highly inflationary over a period of time, but the deflationary
Speaker 1: forces are still so extant that he had no choice
Speaker 1: other than to go full monthy. I think he's done
Speaker 1: the right thing, as others may argue, but it will
Speaker 1: continue to be I think manifestly bears of the euro
Speaker 1: par is on its way. Do we see contraction in
Speaker 1: spreads among the Eurozone countries? Is this going to reach
Speaker 1: out to the periphery? As to that that question, I'm
Speaker 1: not quite sure. I understand, well, a lot of what
Speaker 1: the ECB has done hasn't helped the peripheral countries in
Speaker 1: the year Zone as much because their rates are higher. Yes, okay,
Speaker 1: I understand. Yeah, of course it should narrow those spreads.
Speaker 1: It has to, and it it really would be mathematically
Speaker 1: impossible to do otherwise. So the answer is, yes, it will.
Speaker 1: I think it is going to be highly inflationary. I
Speaker 1: think is what he should have done. I'm I'm I'm
Speaker 1: full in with what he's done today. They those on
Speaker 1: the far light may take me to tap board, but
Speaker 1: I don't think you had any Okay, So Dennis, you
Speaker 1: go down to your North Carolina state, you speak to
Speaker 1: their economics honors program at the Pool Management Hall and
Speaker 1: all that. None of this is in the textbooks you are,
Speaker 1: Michael McKee, study none of it. It is que I'm sorry, folks,
Speaker 1: Rubini absolutely nailed this. And I'm not even gonna pretend
Speaker 1: to fake. Is a wonderful accent. Quee one, que two?
Speaker 1: Where the hell are we in the count of Quee's this?
Speaker 1: This is three. We're going to four, We'll go to twelve,
Speaker 1: We'll go to fourteen. What is the price of that?
Speaker 1: I knew you were gonna say that. What's the price
Speaker 1: of that? Mr? I'm not sure. I don't know. They
Speaker 1: hope it shall be an inflation. Everybody wants to see
Speaker 1: an inflation of two or more, whether it's the ECB,
Speaker 1: whether it's the Bank of Japan, whether it's the nobody's
Speaker 1: getting in Dennis. I got Olivia Blanchard on the program
Speaker 1: this morning saying, look, there's no fire in house. There
Speaker 1: is economic growth. There is there is real economy, signs
Speaker 1: of good in the US and in Europe. What's the
Speaker 1: y here to jump start the macro position other than
Speaker 1: the jump started for the conspiracy of the ruling class. Well,
Speaker 1: I'm not sure that I agree that there that there
Speaker 1: are signs in Europe of economic strength. There are signs
Speaker 1: in the United States, perhaps of modest, slow, laborious one
Speaker 1: to two GDP growth, But I'm not sure that I
Speaker 1: see the same things in Europe. And I think that
Speaker 1: drug has Actus really done the correct thing. If you
Speaker 1: look at the unemployment rates that exist, especially among the
Speaker 1: youth in in in in Europe, there is an ample
Speaker 1: supply of of of labor to be gotten. There is
Speaker 1: no inflation to be found. I think he had no choice. Now,
Speaker 1: he had no choice. He did the right thing. It
Speaker 1: is affecting markets, but is it going to produce growth
Speaker 1: and inflation? Will it work? That's another question for another time.
Speaker 1: Hasn't it diet? Who one would hope that it works? Certainly,
Speaker 1: he hopes that it works. Certainly everybody expects that it
Speaker 1: should engender in inflation at some point in the future. Certainly,
Speaker 1: most certainly most economists would suspect that that kind of
Speaker 1: helicopter drop of money will result in some sort of
Speaker 1: economic growth. Time only shall tell. But could he should he?
Speaker 1: Let's let's do what the lawyers say and go reductive
Speaker 1: out absurdum, let's go the other direction. Should he have
Speaker 1: tightened monetary policy? Well, of course not. His only course
Speaker 1: of action was to do what he's done today. And
Speaker 1: this is just this is que three on its way
Speaker 1: to QUEI fourteen. Whether we like it or not, that's
Speaker 1: the reality, and as traders, that's how we have to deal.
Speaker 1: Does this make you long of stocks? You really have
Speaker 1: no choice. This this this should have to make you
Speaker 1: long of stocks. What it does make me is short
Speaker 1: of the euro and long of gold. That that that I,
Speaker 1: without equivocation, is where I wish to be. Should it
Speaker 1: make you long of stocks, you really do. Clearly you
Speaker 1: don't wish to be short of them in this environment,
Speaker 1: and probably you should be long with them. I can't
Speaker 1: imagine doing Gartman's job or anybody like Gartman right now.
Speaker 1: I'm figuring out so quickly what it means. Um at
Speaker 1: this point, what does it mean in other parts of
Speaker 1: the world. I think it means that the bank in
Speaker 1: Japan has has no choice but to follow up the
Speaker 1: bank exactly he has has done. They don't have any choice.
Speaker 1: I mean, it's a quey war almost. I mean, what
Speaker 1: is the correlation of our banks right now? They've all
Speaker 1: they're all I'm sorry, every bank is reacting off every
Speaker 1: other one. Right, Yes, maybe maybe it is a problem
Speaker 1: of great communications. In the twenty five years ago when
Speaker 1: I first, when I had begun to get somewhat smart
Speaker 1: in this business, having started forty years ago, even then
Speaker 1: you would not have known what the ECB had done
Speaker 1: for several days. Now we have to make decisions as
Speaker 1: to what the ECB has done in the course of
Speaker 1: ten minutes and decide what it means for the next
Speaker 1: four months. The best I can say is drawing upon history.
Speaker 1: What they've done today is just the first another step
Speaker 1: in a long step of pot processes. Just joining us
Speaker 1: Tennis Gartment the garment letter, Dennis, you've only got you
Speaker 1: for two blocks today, not three. Let me get to gold,
Speaker 1: which is so important. You keep your gold view in
Speaker 1: those currencies I mean Euro moving to parody that gives
Speaker 1: you some support. Here update us on the Gartment gold call.
Speaker 1: I have been long of gold and yen denominated terms
Speaker 1: for over two years and it's been a wonderful trade.
Speaker 1: If you have been long of golden dollar terms for
Speaker 1: two years, uh year in the poorhouse, you don't feel
Speaker 1: all that good. I've been long of gold in euro
Speaker 1: denominated terms for about almost a year. That feels great.
Speaker 1: It feels better this morning than it did before. But
Speaker 1: it's making new highs. I see no reason to change.
Speaker 1: The fundamentals have gotten stronger, not weaker, in the course
Speaker 1: of the last ten minutes. The technicals are getting stronger,
Speaker 1: not weaker, in the course of the last ten minutes.
Speaker 1: And what I find interesting is few people wish to
Speaker 1: join me on the same trade. What's the best trade
Speaker 1: right now for you long gold in euro terms? As
Speaker 1: of what's especially with what's happened in the last ten
Speaker 1: minutes with the e c B, it's been a great position.
Speaker 1: I see no reason to change. And the only thing
Speaker 1: I wish to do is by is to do more.
Speaker 1: I'll pay a lot more attention to what gold is
Speaker 1: doing in dollar terms, uh perhaps in the next several
Speaker 1: days and a half. In the past and if you
Speaker 1: were able to get gold back about twelve fifty five
Speaker 1: or so in dollars, my propensity to add to my
Speaker 1: euro gold trade and my end gold trade becomes even stronger.
Speaker 1: Let's come back with Dennis Garban right up, as we
Speaker 1: are over market reaction off of major Mike. Did you
Speaker 1: expect this? Uh, nobody expected him to do as much
Speaker 1: as he did. Lots of kitchens sinc photographs out on
Speaker 1: Twitter this morning. Yeah. Some people thought one, some people
Speaker 1: thought the other. But instead he chooses the kitchen sink.
Speaker 1: This is important, whether you agree or disagree. Dennis Gartman
Speaker 1: will continue with us. We will have a spirited conversation
Speaker 1: on the US market. Maybe will also touch on politics
Speaker 1: as well once in a while. Mr Gartman writes about
Speaker 1: US politics on the back end of his coveted note.
Speaker 1: Futures up, seventeen down, futures up. One Gartman's euro linked
Speaker 1: to gold one O eight sixty two one O eight
Speaker 1: sixty two in a good hundred and thirty eight pips
Speaker 1: as well. West Texas intermediat thirty three time not to
Speaker 1: check in with Michael Barr and get the latest world
Speaker 1: in national headlines. Michael, Mike, Tom, thank you very much.
Speaker 1: It's a memory stick that is believed to contain the
Speaker 1: real names and telephone numbers of Islamic state fighters. Germany's
Speaker 1: federal police say they are evaluating files containing personal data
Speaker 1: on members of the Islamic State group. Britain Sky News
Speaker 1: reports that obtained about twenty two thousand Islamic State files
Speaker 1: on the stick stolen from the head of Islamic States
Speaker 1: Internal Security Police by a disillusioned former fighter. Hillary Clinton
Speaker 1: and Bernie Sanders have been trying to make the case
Speaker 1: that they would be better presidential choices for American Hispanics.
Speaker 1: The two Democratic presidential candidates on voting records, on immigration.
Speaker 1: We're a major focus of last night's debate in Miami.
Speaker 1: The Republican presidential candidates will debate tonights in Miami as well.
Speaker 1: Global News twenty four hours a day, powered by our
Speaker 1: twenty four hundred journalists more than a hundred fifty news
Speaker 1: bureaus from around the world. Now Michael Barr, Mike to Michael,
Speaker 1: thanks so much, stay with us in twenty minutes. What
Speaker 1: was to be important is now of global impact drugs
Speaker 1: press kind friends, we'll have that an interpretation for you.
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Speaker 1: news twenty four hours a day. If Bloomberg dot com
Speaker 1: the radio plus mobile lap and on your radio. This
Speaker 1: is a Bloomberg business flash and I'm Karen Moscow. US
Speaker 1: dot index Future has jumped after the European Central Bank
Speaker 1: delivered a bigger than expected boost to its monetary stimulus.
Speaker 1: Let's go to the first Word breaking news desk for
Speaker 1: today's morning call. Here's Bill Maloney. Bill, good morning, Karen.
Speaker 1: That's right. US futures have extended their gains. ECB cut
Speaker 1: all rates and Kelley was boosted to eighty billion euros
Speaker 1: a month. If youre just currently hired by a hundred
Speaker 1: and twenty three points. Sup's gained seventeen and as the
Speaker 1: futures rise by forty one and US tendial at one
Speaker 1: point eight eight percent, and up markets are extending their
Speaker 1: games as well. Italy rises three point two percent on
Speaker 1: the Economic Fund eight thirty. Dragg holds his press conference
Speaker 1: and US initial jobs claims and it's on thirty natural
Speaker 1: gas storage change. In dealing news, NAZAC buys Deutsche Bors's
Speaker 1: options market for one point one billion, and regarding Earns
Speaker 1: this morning, Dollar General beat shares a higher pre market
Speaker 1: and United Technologies reaffirmed sixteen and Q one forecasts. Finally,
Speaker 1: some of your Walshet upgrades and downgrades, Expedia raised, overweighted,
Speaker 1: Piper and facts set cut the cell over at ubs
Speaker 1: live from the first Breaking news desk Gone, Bill Maloney, Karen,
Speaker 1: thanks billan to hear live breaking news of your Bloomberg
Speaker 1: type squaw go on your terminal. Let's ask you a
Speaker 1: wuk go and that's a Bloomberg business flash. Tom and
Speaker 1: Mike Karn, thanks so much Bloomberg Surveillance this morning. Rush
Speaker 1: you Bay Investco. Have you considered all of your investment alternatives?
Speaker 1: Non traditional st classes and strategies may help you achieve
Speaker 1: your goals? Find out more at investco dot com slash alternatives.
Speaker 1: Denis Gartment with it. One of the great things about
Speaker 1: Dennis Gartment. I've said this before. He's one of the
Speaker 1: few people with the courage to actually publish his successes
Speaker 1: and failures in the back of his newsletter. I love
Speaker 1: to say that, Dennis, to bust your chops. But but
Speaker 1: the thing that's cool here is you link technical with
Speaker 1: fundamental with your economics as well. The arch question now
Speaker 1: is commodity and oil bottom. Jeff de Graf was brilliant
Speaker 1: yesterday talking about the search for catharsis I haven't seen it.
Speaker 1: Do I need a cathartic event to scream oil bottom?
Speaker 1: I think more than that, you need a non cathartic event.
Speaker 1: I think you need the most boring thing of all.
Speaker 1: I pay attention. I was taught years ago when I
Speaker 1: began my career in the early seventies in the cotton market,
Speaker 1: to watch the term watch now one commodity future trades
Speaker 1: relative to another, and that knowledge of the term structure
Speaker 1: really has carried over into the energy market. We have
Speaker 1: watched as the carrying charge the contango. I hate to
Speaker 1: get to esoteric, but the contango for the one year
Speaker 1: had gone out as far as nine dollars per barrel
Speaker 1: when spot w T I was trading around twenty six.
Speaker 1: That contango has narrowed into about five dollars. Crude, for
Speaker 1: lack of a better term, is less aggressive in bidding
Speaker 1: to go into storage. It's telling you that informed money
Speaker 1: has really said the lows have been put into crude.
Speaker 1: Twenty six is not going to be taken out on
Speaker 1: the down side. But at the same point, it's gonna
Speaker 1: be very difficult to get the w t I SPOT
Speaker 1: w t I above forty dollars because if the contango continues,
Speaker 1: forty dollars in SPOT gives you about forty five dollars
Speaker 1: out one year. And I'm telling you, at forty five dollars,
Speaker 1: those down in the those up in the back, and
Speaker 1: those down in Midland, Texas are making a lot of money.
Speaker 1: They can hedge and be profitable. So it's gonna be
Speaker 1: difficult to get SPOT crewede about forty dollars because I
Speaker 1: got like eight ways to go with this, and we
Speaker 1: don't have the time this morning. Who's our next guest?
Speaker 1: Mario dragging Mario the press conference? A number of things
Speaker 1: we've talked about a minute that he that have not
Speaker 1: have been answered yet. Uh, Dennis, as long as we
Speaker 1: have just a few moments with you, let me hit
Speaker 1: on what you were saying about soft commodities El Nino fading.
Speaker 1: There's talk of La Nina coming in, which seems to
Speaker 1: historically raise the price of those commodities. Is it time
Speaker 1: to invest? What do you want to do? I think
Speaker 1: that the lows have been seen in the commodity markets generally,
Speaker 1: whether it's in the soft whether it's in the grains,
Speaker 1: whether it's in crude oil, um, and and perhaps maybe
Speaker 1: even sort of kind of gently, maybe even in the
Speaker 1: most barrish of all commodities, that gas. The era of
Speaker 1: being or the age or the year or the two
Speaker 1: years of being short of commodities is probably behind us.
Speaker 1: And I think that the actions taken by the e
Speaker 1: c B this morning simply promote the notion that commodity
Speaker 1: prices are likely to be stronger and not weaker going
Speaker 1: forward in the final time we've got with you. And
Speaker 1: I say this with immense respect for Martin's wage. We
Speaker 1: lost him weight man. You know Marty's wag. Don't fight
Speaker 1: the Fed, don't fight the e c B, don't fight
Speaker 1: the bles. Forget about the esoteric net gas short. What's
Speaker 1: the gartment advice for people, basic people out there to
Speaker 1: invest with these central banks as Marty's wage titans, as
Speaker 1: long as the as long as the central bank wind
Speaker 1: is at your back, and it is and they're not
Speaker 1: going to stop anytime soon. You're better off being long
Speaker 1: than you are being short. You're better off erring on
Speaker 1: the side of being bullish than you are on the
Speaker 1: side of being barished, and you're probably going to be
Speaker 1: better off owning basic commodities. My my old mine is
Speaker 1: I'd like to buy the things that if I dropped
Speaker 1: them on my foot will hurt I e. Aluminum steel, iron, ore,
Speaker 1: trains hips, big things, easy things, the things that go
Speaker 1: along with economic growth. Those are the things that I
Speaker 1: think would make sense. Plus there's dividends to be gotten
Speaker 1: from them. So if you're going with the military authorities
Speaker 1: giving you winded your back, oh those things right, Dennis,
Speaker 1: one minute left. You're a victim of the South. You
Speaker 1: live somewhere near a glorious golf course. I get that.
Speaker 1: As we go to Florida, and as you write about politics,
Speaker 1: I don't want your opinion on this talent. Does Mr
Speaker 1: Trump have an economic policy you've discerned, Yes, protectionism, yes, lunacy.
Speaker 1: Yes he's wrong, and I'm I'm I'm of the hope
Speaker 1: that he is not the nominee and the Republican Party,
Speaker 1: But at this point I'm about to give up that hope.
Speaker 1: The only move to Canada. Oh, of course, very hard
Speaker 1: to play all excepting Vancouver, Dennis, thank you so much, tennis,
Speaker 1: gartment golf. Here's the surveillance breaks to listen today. Chapman
Speaker 1: will not move Togeada, all right, Samaro, Draggy throws the
Speaker 1: kitchen sink at financial markets, and Tom look at what
Speaker 1: is happening to European banks. Deutsche Bank up four and
Speaker 1: a half percent, Associated General up five percent, BNP Parabout
Speaker 1: up four point four percent, the Italian bank UniCredit up
Speaker 1: seven point two percent. Even Bonco Detach, the troubled Italian bank,
Speaker 1: is up four point seven percent. Now, the movement that
Speaker 1: we see, we knew it would be important, but it
Speaker 1: always can surprise. We got the full surprise this morning,
Speaker 1: and there will be headlines. What we will do for you,
Speaker 1: We will give you the headlines. We will then go
Speaker 1: into the next phase of headlines, which will be difficult
Speaker 1: questions and is considered answers. They always in every case
Speaker 1: move markets. The yen starkly weaker this morning one nineteen
Speaker 1: as well. US futures up sixteen, Town futures one two.
Speaker 1: Next the Draggy press conference coming up there with all
Speaker 1: due respect, highlight brought you by land Rover. If it's
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Speaker 1: Beyond broadcasting live to New York, Gloomberg eleventh, Ryo to Washington,
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Speaker 1: and around the globe the Bloomberg Radio Plus Appen Bloomberg
Speaker 1: dot com. This is Bloomberg Surveillance. Good morning again, Say thirty.
Speaker 1: I'm Michael McKee along with Tom Keen. Our economic indicators
Speaker 1: are brought to you by Commonwealth Financial Network. When it's
Speaker 1: time to change the conversation, talk with a broker deal
Speaker 1: r R I A that's ready to listen, call eight
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Speaker 1: com to learn more. Here's an incredible number of Annie
Speaker 1: del Juday said the first Word desk with the jobless
Speaker 1: claims figures. Michael jobless claims just above a four decade low,
Speaker 1: close to a four decade low, falling last week by
Speaker 1: eighteen thousand and two hundred fifty nine thousand, more than
Speaker 1: Wall Street forecast. Again, jobless claims last week close to
Speaker 1: a four decade low two hundred fifty nine thousand. Let's
Speaker 1: go back to New York, all right, Vinnie del Judais,
Speaker 1: jobless claims in the US near a four decade low.
Speaker 1: Tell me the news is all good for markets. This
Speaker 1: morning Olive Blonchard was heated. He's never heated, but within
Speaker 1: the grace. Professor Blanchard states that things are better than
Speaker 1: good in some of these economies. There is exact quote,
Speaker 1: there is no fire in the house, not at the moment,
Speaker 1: not like the world is exploding with growth, but it
Speaker 1: is certainly better then maybe a lot of people in
Speaker 1: the markets think. As I mentioned, we're watching European Bank
Speaker 1: really really move. The stock six centered is up seven
Speaker 1: points now more than two percent, Deutsche Bank up six
Speaker 1: point two percent, sock Gen six point two percent, uh
Speaker 1: Un Credit eight and a half percent. And that is
Speaker 1: on the back of the ECB's action to not only
Speaker 1: cut all three of its major rates, the deposit rate
Speaker 1: down to negative forty basis points, but also increase q
Speaker 1: E by another twenty billion euros to eight billion. We're
Speaker 1: waiting for Mario drug He Brendan Brown with us, Honored
Speaker 1: to have him with us. He has thought long and
Speaker 1: hard um about eurodynamics. In Global Dynamics of Banking two
Speaker 1: thousand thirteen, the Global Curse of the Fellow Reserve is
Speaker 1: the rewrite the global curse of the European Central Bank.
Speaker 1: That's a very appropriate title, I think. And I see
Speaker 1: today's Mike, could you pull the microphone closer to Dr Brown?
Speaker 1: It's his first time he's ever been with us, And
Speaker 1: I see today's announcements from the e c B is
Speaker 1: Act three in currency wool um plus a massive operation
Speaker 1: to share up the weak European banks, most of all
Speaker 1: in Italy. You already left worrying whether ECP President Dragging
Speaker 1: is actually president of the Italian Central Bank. Well, he's
Speaker 1: a president of the e c B. If it's a
Speaker 1: currency ward, is the b O J joined in there
Speaker 1: next on the calendar? Well, I think the question is
Speaker 1: on the U S side. We we We've had a
Speaker 1: very lively election campaign to save at least in in
Speaker 1: in the United States, and a lot of concern about
Speaker 1: currency manipulation in Japan and China. But it's about time
Speaker 1: that the politicians here focused on the currency manipulation in Europe.
Speaker 1: We are watching Mario dragging move towards the press conference.
Speaker 1: You see this entourage is balance between Hansie and and
Speaker 1: neo classics. Do you see how he does that? There's
Speaker 1: no Austrians in Santrage. He has walked in and now
Speaker 1: we get the obligatory photo up where all of the
Speaker 1: cameras in Europe are trained upon the men of the hour,
Speaker 1: Mario dragging up on the diet with him, vidor Constantio.
Speaker 1: Everybody does it different of the ECB. You'll begin to
Speaker 1: press covers at the moment and we'll have I want
Speaker 1: to ask Brendon, does does it mean the FED is
Speaker 1: I'll hold longer. No, I don't see that. I think
Speaker 1: we have to see beyond five minutes what the reaction
Speaker 1: is in the US markets and US economy. But I
Speaker 1: don't see today's event is a huge market mover economy move.
Speaker 1: I would just I would just make one final comment,
Speaker 1: but it's been a complete failure I think of political
Speaker 1: leadership in Germany to to hold this latest assault from track. Well,
Speaker 1: we'll see if Mario dragging talks about that, he's beginning
Speaker 1: his news conference now in Frankfurt. Let's go to the
Speaker 1: President the European Central Bank. Ladies and gentlemen, The Vice
Speaker 1: President and I are very pleased to welcome you to
Speaker 1: our press conference. We will now a report on the
Speaker 1: outcome of today's meeting of the Governing Council, which was
Speaker 1: also attended by the Commission Vice President is that dombrovskis
Speaker 1: based on our regular economic and monetary policy monitory analysis.
Speaker 1: We have conducted a thorough review of the monetary policy stance,
Speaker 1: in which we also took into account the new microeconomic
Speaker 1: projections by our staff extending into the year two thousand eighteen.
Speaker 1: As a result, the Governing Council has the decided has
Speaker 1: decided on a set of measures in the pursuit of
Speaker 1: its price stability objective. This comprehensive package will exploit the
Speaker 1: synergies between the different instruments and has been calibrated to
Speaker 1: further ease financing conditions, stimulate new credit provision and thereby
Speaker 1: reinforced the momentum of the Euro Area's economic recovery and
Speaker 1: accelerate the return of inflation to levels below but close
Speaker 1: to two First as regomards the key E C D
Speaker 1: interest rates. We decided to lower the interest rate on
Speaker 1: the main refinancing operations of the eurosystem by five basis
Speaker 1: points to zero and the rate on the marginal lending
Speaker 1: facility by five basis points to zero point twenty five.
Speaker 1: The rate on the deposit facility was lowered by ten
Speaker 1: basis points two mins zero point four percent. Second, we
Speaker 1: decided to expand the monthly purchases under our asset purchase
Speaker 1: program from sixty billion euros to at present to eighty
Speaker 1: billion euros. They are intended to run until the end
Speaker 1: of March two thousand and seventeen, or beyond if necessary,
Speaker 1: and in any case, until the Governing Council sees a
Speaker 1: sustained adjustment in the path of inflation consistent with its
Speaker 1: aim of achieving inflation rates below but close to cent
Speaker 1: over the media term. To ensure the continued smooth implementation
Speaker 1: of our asset purchases, we also decided to increase the
Speaker 1: issuer and issue share limits for the purchases of securities
Speaker 1: issued by eligible international organizations and multilateral development banks from
Speaker 1: thirty three percent to fifty percent. Third, we decided to
Speaker 1: include investment grade Euro denominated bonds issued by non bank
Speaker 1: corporations established in the Euro Area in the list of
Speaker 1: assets that are eligible for regular purchases under a new
Speaker 1: corporate sector purchase program. This will further strengthen the pass
Speaker 1: through over ours purchases to the financing conditions of the
Speaker 1: real economy. Purchased under the new program will start towards
Speaker 1: the end of the second quarter of this year. Fourth,
Speaker 1: we decided to launch a new series of four targeted
Speaker 1: longer term refinancing operations tel TROW two starting in June
Speaker 1: two thousand and sixteen, each with a maturity of four years.
Speaker 1: These new operations will reinforce the ecb is a commodative
Speaker 1: monetary policy stands and will strengthen the transmission of monetary
Speaker 1: policy by further incentivizing bank lending to the real economy.
Speaker 1: Counterparties will be entitled to borrow up to of the
Speaker 1: stock of eligible loans as of the thirty as as
Speaker 1: at the thirty one January two thousand sixteen, The interest
Speaker 1: rate under TELTRO tool will be fixed over the life
Speaker 1: of each operation at the rate on the eurosystems may
Speaker 1: refinancing operations prevailing at the time of take up for
Speaker 1: banks whose net landing exceeds a benchmark. The rate applied
Speaker 1: to the Teltro tool will be lower and can be
Speaker 1: as low as the interest rate on the deposit facility
Speaker 1: prevailing at the time of the take up. There will
Speaker 1: be no require arement for mandatory earlier payments under Teltro tool,
Speaker 1: and switches from Teltro one will be allowed. Finally, looking ahead,
Speaker 1: taken into account the current outlook for price stability, the
Speaker 1: Governing Council expects the key ECB interest rates to remain
Speaker 1: at present or lower levels for an extended period of
Speaker 1: time and well past the horizon of our net asset purchases.
Speaker 1: Separate press releases with further details of the measures taken
Speaker 1: by the Governing Council will be published this afternoon at
Speaker 1: three thirty Adding to the measures taken since June two
Speaker 1: thousand fourteen, with today's comprehensive package of monetary policy decisions,
Speaker 1: we are providing substantial monetary stimulus to counteract heightened risks
Speaker 1: to the e CBS price stability objective with the While
Speaker 1: very low or even negative inflation rates are unavoidable over
Speaker 1: the next few months as a result of movements in
Speaker 1: oil prices, it is crucial to avoid second round effects
Speaker 1: by securing the return of inflation to levels below but
Speaker 1: close to without undue delay, be going to an annual
Speaker 1: rate of ten point five percent in January after ten
Speaker 1: in December. Loan dynamics continued the path of gradual recovery
Speaker 1: observed since the beginning of two thousand fourteen. The annual
Speaker 1: rate of change of loans to non financial corporations increased
Speaker 1: to zero point six percent in January two thousand sixteen,
Speaker 1: up from zero point one in December two thousand fifteen.
Speaker 1: Developments in loans to enterprises continue to reflect the lack
Speaker 1: of relationship with the business cycle, credit risk, and the
Speaker 1: ongoing adjustment of financial and non financial sector balance sheets.
Speaker 1: The annual growth rate of loans two households remained stable
Speaker 1: at one point four percent in January two thousand sixteen. Overall,
Speaker 1: the monetary policy measures in place since June two fourteen
Speaker 1: have clearly improved borrowing conditions for firms and households, as
Speaker 1: well as credit flows across the Euro Area. To sum
Speaker 1: up across check of the outcome of the economic and
Speaker 1: just with the signals coming from the monetary analysis confirmed
Speaker 1: the need for further monetary stimulus in order to secure
Speaker 1: the return of inflation race towards levels that are below
Speaker 1: but close to two without undue delay. Monetary policy is
Speaker 1: focused on maintaining price stability over the medium term, and
Speaker 1: it's accommolative stance supports economic activity. However, in order to
Speaker 1: rip the full benefits from our monetary policy measures are
Speaker 1: the policy areas must contribute decisively. Given continued high structural
Speaker 1: unemployment and low potential output growth in the EU Area,
Speaker 1: the ongoing cyclical recovery should be supported by effective structural policies. Inarticular,
Speaker 1: actions to raise productivity and improve the this environment, including
Speaker 1: the provision of an adequate public infrastructure, are vital to
Speaker 1: increase investment and boost job creation. The swift and effective
Speaker 1: implementation of structural reforms in an environment of accommodative monetary
Speaker 1: policy will not only lead to higher sustainable economic growth
Speaker 1: in the euro Area, but will also make the euro
Speaker 1: Area more resilient to global shocks. As indicated by the
Speaker 1: European Commission, the implementation of country specific recommendations continued to
Speaker 1: be fairly limited into thousand fifteen. Reform efforts thus need
Speaker 1: to be stepped up. In the majority of Euro Area countries.
Speaker 1: Fiscal policies should support the economic recovery while remaining in
Speaker 1: compliance with the fiscal rules of the European Union. Full
Speaker 1: and consistent implementation of the Stability and Growth Pact is
Speaker 1: crucial to maintain confidence in the fiscal framework. At the
Speaker 1: same time, all countries should strive for a more growth
Speaker 1: friendly composition of fiscal policies. We are now at your
Speaker 1: disposal for questions, Mr President Alexandro, especially from Bloomer News. UM.
Speaker 1: My first question is about UM the forward guidance that
Speaker 1: you have given that rates will be lower for a
Speaker 1: long time. Also after the end of asset purchases. Is
Speaker 1: the duration of the new THA tr row to be
Speaker 1: looked at in this respect and this will also extend
Speaker 1: to past the end of your mandate if I'm not
Speaker 1: mistaken or almost And um, And my second question would
Speaker 1: be when you say lower, UM, how low can this be?
Speaker 1: I know that this has changed a lot in the
Speaker 1: past few years as new horizons have open firm monetary policy.
Speaker 1: But do you have any idea are you approaching a
Speaker 1: limit or you still have an EMBL room to go?
Speaker 1: And and that's two castance ready, Yeah, well on on
Speaker 1: the UM on the teltor I just can't give you
Speaker 1: a sort of a brief overview of what this operation is,
Speaker 1: keeping in mind that there's going to be a press
Speaker 1: briefing at four today UH for today for all the
Speaker 1: further technical details that you may may be interested now.
Speaker 1: The teltors are refinancing operations that provide lows two banks
Speaker 1: with a long maturity, and banks are given additional incentives
Speaker 1: to land on the funds received. The key features of
Speaker 1: our Teltro program are the following. We will offer four operations,
Speaker 1: one each quarter starting June two thousand and sixteen until
Speaker 1: March two thousand seventeen. The maturity of the operations will
Speaker 1: be four years each, so that the last Teltro two
Speaker 1: will mature in March two thousand twenty one. Banks will
Speaker 1: pay the MR rate at the time of bidding, so
Speaker 1: right now at zero, and they may even get a
Speaker 1: reduction on that rate, which increases with the amount of
Speaker 1: loans they grant. Yeah, so the maximum reduction will bring
Speaker 1: the rate on the Teltro tool to the level of
Speaker 1: the deposit facility rate at the time of bidding. The
Speaker 1: amount that banks can borrow is linked to the amount
Speaker 1: of loans they have on their balance sheet, so a
Speaker 1: bank that's very active in granting loans to the real
Speaker 1: economy can borrow more than a bank that concentrates on
Speaker 1: other activities. So the full list of features is in
Speaker 1: the press release that will be published after this press conference.
Speaker 1: So why did we decide to have another series of
Speaker 1: teltros Well, some of the main reasons are long growth
Speaker 1: in the EU area is being recovering now for quite
Speaker 1: a time, but it's still too low. Also, teltro too well,
Speaker 1: and we had actually a pretty successful experience with the
Speaker 1: first tel throw, so we expect the Teltro too will
Speaker 1: offer attractive long term funding conditions to banks to further
Speaker 1: ease private sector credit conditions and to stimulate credit creation.
Speaker 1: I think this is quite important now. Also it provides
Speaker 1: funding certainty. Let's not forget it's four years operation at
Speaker 1: an attractive price in an environment of increasing volatility and
Speaker 1: also an environment of large upcoming bond redemptions bank bond redemptions,
Speaker 1: so banks face sizeable forthcoming funding needs. And so this
Speaker 1: occurs in an environment where the price you know, bank
Speaker 1: debt is volatile and uncertain. So we with think that,
Speaker 1: in conjunction with all the other measures standard and non
Speaker 1: standard in place, the startro two will contribute to a
Speaker 1: return of inflation rates to an objective of close but
Speaker 1: below two percent over the medium term. Thank you, I'm sorry. Well,
Speaker 1: I yes, Well, that's how low can we go? That's
Speaker 1: on the um. Let me say that the rates will
Speaker 1: stay low, very low, for a long period of time
Speaker 1: and well past the horizon of our purchases. From today's
Speaker 1: perspective and taking into account the support of our measures
Speaker 1: to growth and inflation, we don't anticipate that it will
Speaker 1: be necessary to reduce rates for there. Of course, new
Speaker 1: facts can change the situation and the outlook. I mean
Speaker 1: also add that the experience we had with negative rates
Speaker 1: in our case, at least, it's been very positive in
Speaker 1: easing financing conditions and in the transmission of this better
Speaker 1: financing conditions to the real economy. We're also aware that,
Speaker 1: by the way here, there are different views about whether
Speaker 1: negative rates have affected or how they affect the profitability
Speaker 1: of the banking system. We can discuss this later, but
Speaker 1: let me ask you, I mean doesn't mean that any
Speaker 1: negative rate will be positive. Doesn't mean that we can
Speaker 1: go as negative as we want without having any consequence
Speaker 1: on the banking system. Yes, it is now and um,
Speaker 1: you probably know that we've discussed for some time the
Speaker 1: possibility of having a tearing system, so an exemption system
Speaker 1: from for this operation. And in the end the Going
Speaker 1: Council decided not to exactly for the purpose of not
Speaker 1: signaling that we can go as low as we want
Speaker 1: on this. So the Going Council is basically, although it
Speaker 1: gives a positive judgment about the past experience, is increasingly
Speaker 1: aware of the complexities that this measure entails. Uh As
Speaker 1: as I said before, we think and we have numbers.
Speaker 1: The Show and the Vice Presidence particularly well documented on
Speaker 1: this that the aggregate profitability