1 00:00:03,320 --> 00:00:06,880 Speaker 1: This is Bloomberg Surveillance. The banks are in much better 2 00:00:06,920 --> 00:00:09,520 Speaker 1: position now than they were before the crisis, much more 3 00:00:09,560 --> 00:00:12,040 Speaker 1: capital and they're much more resilient. One of the more 4 00:00:12,080 --> 00:00:16,200 Speaker 1: important transmission mechanisms of monetary policy when rates get to 5 00:00:16,360 --> 00:00:19,040 Speaker 1: very low levels is actually through the exchange rate. But 6 00:00:19,120 --> 00:00:21,640 Speaker 1: after the People's Bank of China, the Centilment of China 7 00:00:21,840 --> 00:00:24,000 Speaker 1: is going to do in terms of this momment policy 8 00:00:24,040 --> 00:00:27,200 Speaker 1: will have a big impact on market s. Bloomberg Surveillance 9 00:00:27,440 --> 00:00:31,000 Speaker 1: your link to the world of economics, finance and investment 10 00:00:31,240 --> 00:00:35,760 Speaker 1: on Bloomberg Radio. Good morning, and Michael McKeen along with 11 00:00:35,800 --> 00:00:38,560 Speaker 1: Tom Keene. It is seven am on Wall Street, one 12 00:00:38,760 --> 00:00:42,120 Speaker 1: pm in Frankfurt, where in forty five minutes the European 13 00:00:42,159 --> 00:00:46,320 Speaker 1: Central Bank will announce its latest monetary policy decision. What 14 00:00:46,880 --> 00:00:49,760 Speaker 1: will Mario do? We will have the decision and you'll 15 00:00:49,800 --> 00:00:52,960 Speaker 1: hear from Senor Draggy at eight thirty Wall Street time, 16 00:00:53,320 --> 00:00:55,240 Speaker 1: and all morning we'll be looking at the possibilities and 17 00:00:55,360 --> 00:00:59,960 Speaker 1: reaction here on surveillance ahead of the decision. European stocks 18 00:01:00,000 --> 00:01:02,840 Speaker 1: are mixed. The stock six is up a tenth of 19 00:01:03,000 --> 00:01:06,839 Speaker 1: eight percent, that's less than a full point. The decks 20 00:01:06,959 --> 00:01:09,880 Speaker 1: is up twenty three points two tenths of eight percent 21 00:01:10,160 --> 00:01:12,360 Speaker 1: in the California, which was negative very much of the day, 22 00:01:12,640 --> 00:01:15,440 Speaker 1: even though we had a stronger that expected French industrial 23 00:01:15,480 --> 00:01:18,560 Speaker 1: production report. Now reflecting that up a tenth of a 24 00:01:18,600 --> 00:01:21,560 Speaker 1: percent five points on the day, the foot seas off 25 00:01:21,560 --> 00:01:25,119 Speaker 1: by sixteen that's about a three tents drop. The Euro 26 00:01:25,720 --> 00:01:28,479 Speaker 1: at the moment is lower one o nine seventy four, 27 00:01:28,520 --> 00:01:30,320 Speaker 1: but we should point out, of course, it is higher 28 00:01:30,360 --> 00:01:34,520 Speaker 1: than it was on December three, when the Bank of 29 00:01:34,920 --> 00:01:38,840 Speaker 1: when the European centerre Bank last met and disappointed the markets. 30 00:01:38,880 --> 00:01:43,360 Speaker 1: In general, we can say European bond curves are slightly 31 00:01:43,640 --> 00:01:48,000 Speaker 1: flatter today. The German two year at negative basis points. 32 00:01:48,360 --> 00:01:52,640 Speaker 1: Here In the US futures decidedly higher. SMP evening features 33 00:01:52,680 --> 00:01:54,840 Speaker 1: up by seven points three tenths of a percent, down 34 00:01:54,880 --> 00:01:59,000 Speaker 1: features by two tenths. The NASDAC evening features are up eleven, 35 00:01:59,400 --> 00:02:02,480 Speaker 1: that is a three tents gain for that index. The 36 00:02:02,520 --> 00:02:06,680 Speaker 1: dollar is a little bit weaker against the YenS. Some 37 00:02:06,800 --> 00:02:10,679 Speaker 1: haven flows there one thirteen sixty two the pound one 38 00:02:10,800 --> 00:02:15,120 Speaker 1: forty two oh nine. Bonds in the US are higher, 39 00:02:15,240 --> 00:02:17,600 Speaker 1: yields lower one point eight six for the ten year 40 00:02:17,680 --> 00:02:20,040 Speaker 1: five year at one point three six, the two year 41 00:02:20,080 --> 00:02:22,720 Speaker 1: at point eight eight. And of course we should mention 42 00:02:22,760 --> 00:02:26,040 Speaker 1: oil prices because Mario Draggy has cited those as an 43 00:02:26,040 --> 00:02:29,320 Speaker 1: important factor in what the ECB does because of their 44 00:02:29,360 --> 00:02:33,959 Speaker 1: influence on inflation. Brent crude forty six is down three 45 00:02:34,000 --> 00:02:36,960 Speaker 1: quarters of a percentage point, West Texas at thirty eight 46 00:02:37,080 --> 00:02:41,720 Speaker 1: nineteen off by three tents. Well, the ECB will never 47 00:02:41,800 --> 00:02:44,320 Speaker 1: say this, but one goal of cutting rates is to 48 00:02:44,560 --> 00:02:47,280 Speaker 1: weaken the euro. How does that affect the rest of 49 00:02:47,320 --> 00:02:53,239 Speaker 1: the world. Constantinos Venetics is with Lombard Street Global Macro Research. 50 00:02:53,639 --> 00:02:56,919 Speaker 1: You've been looking at a rally in emerging markets because 51 00:02:57,000 --> 00:03:01,440 Speaker 1: the currencies that we have been fall going have basically 52 00:03:01,480 --> 00:03:05,160 Speaker 1: been stable, although the U S trade weighted dollar has 53 00:03:05,200 --> 00:03:11,440 Speaker 1: fallen three percent since the ECB last met. But correct here. 54 00:03:11,480 --> 00:03:14,920 Speaker 1: I think we have some old this rally. We have 55 00:03:15,240 --> 00:03:18,800 Speaker 1: seen the US data at the margin improve. Chinese policy 56 00:03:18,880 --> 00:03:22,480 Speaker 1: makers also want to stimulate up with the margins, so 57 00:03:22,520 --> 00:03:24,560 Speaker 1: I guess you know we may have more of this rally. 58 00:03:24,760 --> 00:03:28,079 Speaker 1: Having said that calling the bottom is a bit premature stage, 59 00:03:28,120 --> 00:03:30,440 Speaker 1: I think, well, how would you describe it? Give me 60 00:03:31,040 --> 00:03:35,000 Speaker 1: an adjective or a description to to sort of set 61 00:03:35,000 --> 00:03:37,440 Speaker 1: the stage for where we are in emerging markets as 62 00:03:37,480 --> 00:03:40,600 Speaker 1: they watch this week the ECB and Baku in Japan, 63 00:03:40,640 --> 00:03:44,400 Speaker 1: next week the US FED. I think that the margin 64 00:03:44,480 --> 00:03:47,560 Speaker 1: things are getting less bad. That's the key point here 65 00:03:47,760 --> 00:03:50,200 Speaker 1: is it's kind of a green shoot mentality. People are 66 00:03:50,200 --> 00:03:52,720 Speaker 1: seeing this and sort of with the US and Chinese 67 00:03:52,760 --> 00:03:54,320 Speaker 1: data are getting better of the trying to sort of 68 00:03:54,360 --> 00:03:57,600 Speaker 1: buy into this and cover their sorts somewhat. But I think, 69 00:03:57,640 --> 00:04:00,520 Speaker 1: you know, if you look at this more structurally, China 70 00:04:00,600 --> 00:04:03,280 Speaker 1: still fragiants of p M eyes are stable but still 71 00:04:03,320 --> 00:04:07,240 Speaker 1: pointed to contraction, and money is tightening over ealy in 72 00:04:07,280 --> 00:04:09,640 Speaker 1: the MS, and I think you have this prolonged sort 73 00:04:09,640 --> 00:04:12,440 Speaker 1: of flow weakness of growth and earnings have been weak 74 00:04:12,480 --> 00:04:15,760 Speaker 1: for some time, and this at some point contaminates battansweet 75 00:04:15,800 --> 00:04:18,160 Speaker 1: sort of stock is contaminated, and I think this will 76 00:04:18,240 --> 00:04:20,920 Speaker 1: sort of begin to show in the next few quarters. 77 00:04:20,960 --> 00:04:24,800 Speaker 1: So calling the bottom here maybe be premature for these reasons, 78 00:04:25,160 --> 00:04:27,279 Speaker 1: but still we're here in the same tone folks from 79 00:04:27,320 --> 00:04:31,560 Speaker 1: Constantinos Venez that we heard from Olivia Blanchart earlier this 80 00:04:31,600 --> 00:04:37,040 Speaker 1: morning about things are modestly improving. Bloomberg surveillance this e 81 00:04:37,160 --> 00:04:41,360 Speaker 1: c D Morning brought you by Investco. Looking for investment 82 00:04:41,440 --> 00:04:45,160 Speaker 1: views experienced experts. Just to click away, go to investco 83 00:04:45,880 --> 00:04:49,679 Speaker 1: dot com, slash us to subscribe to the investco blog 84 00:04:49,720 --> 00:04:54,640 Speaker 1: and follow and investco us on Twitter. Constantino's when I 85 00:04:54,680 --> 00:04:58,000 Speaker 1: when I look at the the interdependencies of Europe and 86 00:04:58,040 --> 00:05:02,719 Speaker 1: all who Mario dragging speaking to today in the press conference, 87 00:05:02,720 --> 00:05:07,839 Speaker 1: I'm always fascinated by the audiences, the audience other finance 88 00:05:07,960 --> 00:05:11,279 Speaker 1: ministers and central bankers. Is it a one way dialogue 89 00:05:11,279 --> 00:05:14,679 Speaker 1: with the Bundesbank. Is he speaking to Eastern Europe? Who's 90 00:05:14,680 --> 00:05:17,400 Speaker 1: he talking to? I think it's all of these together. 91 00:05:17,680 --> 00:05:20,000 Speaker 1: But I think with some driving, at some point we 92 00:05:20,200 --> 00:05:22,800 Speaker 1: like to see the fiscal side become a bit more 93 00:05:22,839 --> 00:05:25,320 Speaker 1: stimulative and a bit more proactive, and that in Europe 94 00:05:26,360 --> 00:05:28,520 Speaker 1: always takes time, and that's a key problem. At the 95 00:05:28,520 --> 00:05:31,360 Speaker 1: same time, you know, we've seen the Japanese experience with 96 00:05:31,440 --> 00:05:36,239 Speaker 1: magative rates haven't really brought all the things people wanted 97 00:05:36,320 --> 00:05:38,320 Speaker 1: them to bring in the beginning. So I guess you 98 00:05:38,360 --> 00:05:40,800 Speaker 1: know we are in a same situation. Uh here will 99 00:05:40,880 --> 00:05:43,080 Speaker 1: do whatever it takes, but I think at some point 100 00:05:43,160 --> 00:05:45,840 Speaker 1: this will have two more into a fiscal force as well. 101 00:05:45,920 --> 00:05:48,520 Speaker 1: How does that happen, Mike, I don't see. I don't 102 00:05:48,920 --> 00:05:54,320 Speaker 1: understand the mechanism. It's like inflation easts, except it's austerity 103 00:05:54,400 --> 00:05:58,760 Speaker 1: easter is almost well. That doesn't seem to be much 104 00:05:59,440 --> 00:06:03,760 Speaker 1: enthusiasm as of constantinus for any kind of ciscal activity 105 00:06:03,880 --> 00:06:06,599 Speaker 1: in the Arizona anywhere else in the world right now. 106 00:06:07,520 --> 00:06:10,240 Speaker 1: Very correct, but I think inflation nevertheless will at some 107 00:06:10,279 --> 00:06:12,920 Speaker 1: points started to migrate towards core inflation in Europe, which 108 00:06:12,920 --> 00:06:16,520 Speaker 1: is about one percent, And that's the hope that by 109 00:06:16,600 --> 00:06:18,560 Speaker 1: sly at the moment, of course they need to push 110 00:06:18,640 --> 00:06:22,600 Speaker 1: for that and sort of be seen as actually adding 111 00:06:22,640 --> 00:06:24,800 Speaker 1: to the to these forces. But I think, you know, 112 00:06:24,839 --> 00:06:28,440 Speaker 1: base effects as well as some growth in Europe should 113 00:06:28,480 --> 00:06:33,599 Speaker 1: see headline CPI tend to the core this year. Your 114 00:06:33,640 --> 00:06:38,400 Speaker 1: focus is on e M research as well. How is 115 00:06:38,520 --> 00:06:41,880 Speaker 1: trade doing in particularly with Europe where it's such an 116 00:06:41,920 --> 00:06:46,680 Speaker 1: important part of their economic mix. Trade has been sluggish. 117 00:06:46,720 --> 00:06:49,880 Speaker 1: It has been showing signs of life, but nothing game changing. 118 00:06:50,000 --> 00:06:53,800 Speaker 1: And I think you know, unless China, uh you know, 119 00:06:54,640 --> 00:06:58,480 Speaker 1: grows more than it does now or at least people 120 00:06:58,560 --> 00:07:03,680 Speaker 1: are less uncertain about it. Trade um sort of very 121 00:07:03,720 --> 00:07:08,920 Speaker 1: trust Uh you will see em trade remains subdued and 122 00:07:09,000 --> 00:07:11,400 Speaker 1: prices as well as volumes are being subdued, so that 123 00:07:11,560 --> 00:07:16,640 Speaker 1: doesn't help at all. Divergence is the story everybody's talking 124 00:07:16,680 --> 00:07:19,760 Speaker 1: about right now. With the FED set to raise rates 125 00:07:19,800 --> 00:07:22,960 Speaker 1: at least sometime this year and all the focus being 126 00:07:23,040 --> 00:07:25,640 Speaker 1: on the other central banks lowering rates, how does that 127 00:07:25,680 --> 00:07:28,280 Speaker 1: affect the rest of the world or have we priced 128 00:07:28,280 --> 00:07:33,360 Speaker 1: it well? It's a good question, I think in the MS, 129 00:07:33,400 --> 00:07:36,160 Speaker 1: at least, you have to be looking at different areas 130 00:07:36,200 --> 00:07:40,000 Speaker 1: and you're different conclusions. So say in Latin countries like Brazil, 131 00:07:40,080 --> 00:07:45,120 Speaker 1: inflation has been high. Uh, physical policy hasn't really been discipline, 132 00:07:45,160 --> 00:07:49,240 Speaker 1: so dense centle banks are essentially prevented from easing policy 133 00:07:49,360 --> 00:07:53,119 Speaker 1: even though you have growth in recession in most of Asia. 134 00:07:53,200 --> 00:07:56,600 Speaker 1: On the other hand, uh, in inflation is low, maybe 135 00:07:56,680 --> 00:08:01,160 Speaker 1: you have even disinflation or deflaced them in some places, 136 00:08:01,200 --> 00:08:03,520 Speaker 1: and rates have been coming down having sept up. In 137 00:08:03,600 --> 00:08:06,960 Speaker 1: real terms if you compare me to say ten levels, 138 00:08:07,200 --> 00:08:09,840 Speaker 1: these are much higher than we were back then. So 139 00:08:10,960 --> 00:08:14,160 Speaker 1: the big picture here is that real rates are higher, 140 00:08:14,200 --> 00:08:17,680 Speaker 1: spreads are higher, and this means type of money conditions 141 00:08:17,800 --> 00:08:21,600 Speaker 1: and unless this turns UH, this is the there is 142 00:08:21,600 --> 00:08:23,680 Speaker 1: a not to be calling the bottom here in the 143 00:08:23,800 --> 00:08:27,760 Speaker 1: umbrisk assets. Dr Veniez, thank you so much. Constantinos Venetus 144 00:08:27,840 --> 00:08:33,600 Speaker 1: with Charles Duma Lombard Street at Research UH this morning. Um, 145 00:08:33,679 --> 00:08:36,959 Speaker 1: we have a very busy day calendar this morning clearly 146 00:08:37,040 --> 00:08:42,120 Speaker 1: the top moment we Michael McKee parsing out Mike, how 147 00:08:42,120 --> 00:08:45,760 Speaker 1: many minutes into the press conference did the headlines get important? 148 00:08:46,080 --> 00:08:49,040 Speaker 1: It doesn't start right away on what senior Jogie wants 149 00:08:49,080 --> 00:08:53,360 Speaker 1: to do. Uh. He will generally he'll start off by 150 00:08:53,400 --> 00:08:56,640 Speaker 1: describing what they did in terms of rates, and we'll 151 00:08:56,679 --> 00:08:59,240 Speaker 1: get that data forty five minutes earlier. So if he 152 00:08:59,320 --> 00:09:01,840 Speaker 1: just repeats that, it will matter. You don't want to 153 00:09:01,880 --> 00:09:04,520 Speaker 1: miss too much of it, because he could immediately say 154 00:09:04,559 --> 00:09:07,320 Speaker 1: in addition to rates, we're doing this exactly the in 155 00:09:07,360 --> 00:09:09,240 Speaker 1: addition to and I got much more of that from 156 00:09:09,240 --> 00:09:11,960 Speaker 1: Steve Whiting this morning with City Group. The idea of 157 00:09:12,000 --> 00:09:16,320 Speaker 1: the optionality that Mr Droggi has as he attends the 158 00:09:16,360 --> 00:09:20,360 Speaker 1: moment the Euro one oh nine seventy nine futures of 159 00:09:20,600 --> 00:09:23,160 Speaker 1: Mike mentioned up eight, Dow futures up forty nine, so 160 00:09:23,240 --> 00:09:26,200 Speaker 1: a nice lift to the market. Uh, they are oil 161 00:09:26,280 --> 00:09:30,480 Speaker 1: against churning the entire Bloomberg terminal. I'm gonna go back 162 00:09:30,880 --> 00:09:33,679 Speaker 1: four days, if not six days, has been a churn 163 00:09:33,920 --> 00:09:37,120 Speaker 1: up down, up down, and even minute by many yields 164 00:09:37,120 --> 00:09:39,640 Speaker 1: are infractionally. I don't want to make too much of it. 165 00:09:41,440 --> 00:09:44,800 Speaker 1: On the tenure, We'll watch German two year is a 166 00:09:44,840 --> 00:09:49,160 Speaker 1: headline to headline litmus paper UH for the drug press 167 00:09:49,200 --> 00:09:53,040 Speaker 1: conference negative point five five four to three digits in 168 00:09:53,200 --> 00:09:57,080 Speaker 1: point zero one four h points negative point five five 169 00:09:57,120 --> 00:10:01,960 Speaker 1: four and the German two year as well. Bloomer Surveillance 170 00:10:02,000 --> 00:10:06,880 Speaker 1: this morning brought you by National Reality. Returns on cash 171 00:10:06,880 --> 00:10:10,800 Speaker 1: and rented real estate, find them find National Reality and 172 00:10:10,800 --> 00:10:14,320 Speaker 1: and r I a dot net, and r I a 173 00:10:15,160 --> 00:10:18,439 Speaker 1: dot net. Mike, what's the what's the greatest likelihood that 174 00:10:18,440 --> 00:10:22,640 Speaker 1: we're gonna get out of mr? The forecast consensus is 175 00:10:22,720 --> 00:10:25,600 Speaker 1: for a ten basis point cut in the deposit rate 176 00:10:25,640 --> 00:10:29,280 Speaker 1: to negative forty UH. Then we'll see if he adds 177 00:10:29,360 --> 00:10:33,160 Speaker 1: any que. There's a feeling he may accelerate the purchase 178 00:10:33,200 --> 00:10:37,800 Speaker 1: of bonds across the Europe accelerate beautifully explained, uh. Bloomer 179 00:10:37,880 --> 00:10:42,560 Speaker 1: Surveillance on economics, finance, investment, and international relations. Certainly it 180 00:10:42,640 --> 00:10:47,480 Speaker 1: is an international moment from Mario drag Oil thirty eight 181 00:10:48,040 --> 00:10:53,720 Speaker 1: four The Barrel five no owt to check with Bla 182 00:10:53,880 --> 00:10:56,400 Speaker 1: bar I get the latest world in national headlines, spe 183 00:10:56,600 --> 00:10:59,720 Speaker 1: Mike Tom, thank you very much. Republican Party Chairman Ryan's 184 00:10:59,720 --> 00:11:03,160 Speaker 1: previous says he wants today's Republican presidential debate to be 185 00:11:03,440 --> 00:11:07,200 Speaker 1: more of a g rated event than recent showdowns. The 186 00:11:07,240 --> 00:11:10,280 Speaker 1: four remaining candidates will hold their latest debate tonight at 187 00:11:10,320 --> 00:11:15,080 Speaker 1: the University of Miami. Democratic presidential candidates Hillary Clinton and 188 00:11:15,160 --> 00:11:19,520 Speaker 1: Bernie Sanders debated immigration and other issues last night in Florida. 189 00:11:19,960 --> 00:11:23,120 Speaker 1: Clinton faulted Sanders were repeatedly voting against the two thousand 190 00:11:23,240 --> 00:11:28,120 Speaker 1: seven Comprehensive Immigration Reform Bill. Sanders faulted Clinton for opposing 191 00:11:28,120 --> 00:11:30,640 Speaker 1: a two thousand seven efforts to let people who were 192 00:11:30,679 --> 00:11:34,760 Speaker 1: in the country illegally obtain driver's licenses. Canadian Prime Minister 193 00:11:34,880 --> 00:11:37,480 Speaker 1: Justin Trudeau will pay a visit to the White House today. 194 00:11:37,960 --> 00:11:40,800 Speaker 1: President Barack Obama will give Trudeau a state dinner, the 195 00:11:40,840 --> 00:11:45,000 Speaker 1: first for Canada since nineteen Later today, President Obama and 196 00:11:45,240 --> 00:11:48,880 Speaker 1: Joe will talk about the environment. Global News twenty four 197 00:11:48,920 --> 00:11:51,640 Speaker 1: hours a day, powered by our twenty four hundred journalists 198 00:11:51,840 --> 00:11:53,840 Speaker 1: and more than a hundred fifty news bureaus from around 199 00:11:53,840 --> 00:11:56,640 Speaker 1: the world on Mike Labar Time. Michael, thank you so much. 200 00:11:56,679 --> 00:11:59,640 Speaker 1: Coming up the conversation of the day for global banking 201 00:11:59,720 --> 00:12:07,240 Speaker 1: Jeff Staley of Barclay's. This is Bloomberg Surveillance. Bloomberg Surveillance 202 00:12:07,280 --> 00:12:08,880 Speaker 1: is brought to you by the Town of Hempstead Industrial 203 00:12:08,880 --> 00:12:10,720 Speaker 1: Development Agency. Find out how to put the Tower of 204 00:12:10,720 --> 00:12:14,679 Speaker 1: the Town of Hempstead Idea to work for your business 205 00:12:14,679 --> 00:12:17,079 Speaker 1: three seven zero or visit t O H I d 206 00:12:17,240 --> 00:12:26,800 Speaker 1: A dot org. Welcome back to Bloomberg Surveillance Michael Lackey 207 00:12:26,840 --> 00:12:30,120 Speaker 1: along with Tom Keane. A man with enormous challenges ahead 208 00:12:30,160 --> 00:12:33,200 Speaker 1: of him is James Staley Jess Staley. He's the new 209 00:12:33,240 --> 00:12:37,520 Speaker 1: chief executive officer of Barkley's and he is sitting down 210 00:12:37,559 --> 00:12:41,840 Speaker 1: with our Eric Shatzker for this Welcome to Bloomberg television 211 00:12:41,880 --> 00:12:44,679 Speaker 1: viewers and Bloomberg radio listeners around the world to this 212 00:12:44,679 --> 00:12:48,800 Speaker 1: conversation with Jess Staley, the CEO of Barkley's here at 213 00:12:48,840 --> 00:12:52,480 Speaker 1: Barkley's headquarters in Midtown Manhattan. Jess, Good morning to Eric. 214 00:12:52,520 --> 00:12:55,640 Speaker 1: How you doing. This is your one day anniversary. You 215 00:12:55,679 --> 00:12:58,920 Speaker 1: know that no, but this Nember one of today, one 216 00:12:59,000 --> 00:13:02,960 Speaker 1: hundred days, right, how does it feel it's the honeymoon over? Uh, 217 00:13:03,000 --> 00:13:05,559 Speaker 1: it feels terrific. I mean it's Uh, it's a lot 218 00:13:05,559 --> 00:13:10,080 Speaker 1: of challenges, but there's some strong assets inside of Barkley's. 219 00:13:10,120 --> 00:13:13,040 Speaker 1: The people are great, the client bases is terrific. The 220 00:13:13,040 --> 00:13:16,600 Speaker 1: opportunities for this bank are are great. So it's a run. 221 00:13:17,080 --> 00:13:19,160 Speaker 1: There's a lot in front of us, a lot of challenges, 222 00:13:19,240 --> 00:13:21,719 Speaker 1: but I'm very optimistic about where we're gonna end up. 223 00:13:22,160 --> 00:13:25,520 Speaker 1: Let's speak about some of the immediate challenges. The market 224 00:13:25,559 --> 00:13:28,880 Speaker 1: conditions out there appear to be pretty tough, right, Volatility, 225 00:13:29,480 --> 00:13:33,840 Speaker 1: complaints about the liquidity and a fixed income market for example. 226 00:13:33,880 --> 00:13:37,800 Speaker 1: The operating environment in general is Barkley's on the same 227 00:13:37,840 --> 00:13:40,959 Speaker 1: track as City Group and Jpmorganist quarter looking at the 228 00:13:41,000 --> 00:13:46,040 Speaker 1: sales and trading business down fift You know, obviously the 229 00:13:46,120 --> 00:13:49,360 Speaker 1: markets went through a very traumatic experience in two thousand 230 00:13:49,360 --> 00:13:52,800 Speaker 1: and eight and nine and created a a global calamity 231 00:13:52,840 --> 00:13:55,880 Speaker 1: in terms of the economy that we're still recovering from. 232 00:13:55,920 --> 00:14:00,120 Speaker 1: And how the banks evolved, how the regulators evolved to 233 00:14:00,280 --> 00:14:02,240 Speaker 1: end up in a place where we have a safe 234 00:14:02,240 --> 00:14:05,560 Speaker 1: financial system, where the banks won't get in trouble again. 235 00:14:05,840 --> 00:14:09,680 Speaker 1: But we have a functioning capital markets that finances economic growth. 236 00:14:09,920 --> 00:14:12,480 Speaker 1: We're still in the middle of that process and Barkley 237 00:14:12,559 --> 00:14:15,920 Speaker 1: is a is a player there. Um. We like the 238 00:14:15,920 --> 00:14:18,959 Speaker 1: assets that we have. You know, we've just redefined our 239 00:14:19,160 --> 00:14:23,960 Speaker 1: our strategy around being a transatlantic consumer, corporate and investment bank. 240 00:14:24,480 --> 00:14:27,680 Speaker 1: There are some great businesses there. Um. Uh, So we 241 00:14:27,760 --> 00:14:30,360 Speaker 1: like the assets that we have as a bank, but 242 00:14:30,400 --> 00:14:32,840 Speaker 1: there's still this evolution in the financial markets that we 243 00:14:32,880 --> 00:14:34,400 Speaker 1: have to live through. How is it going to affect 244 00:14:34,400 --> 00:14:36,720 Speaker 1: you this quarter? You know, we're not gonna talk about 245 00:14:36,720 --> 00:14:38,600 Speaker 1: this quarter. We did say we had a pretty good 246 00:14:38,680 --> 00:14:41,840 Speaker 1: January in February. The quarter is not over yet. Um. 247 00:14:42,280 --> 00:14:45,800 Speaker 1: We like how our businesses is moving forward, so but 248 00:14:45,840 --> 00:14:48,280 Speaker 1: we won't comment on the quarters Pacific. These imbalances that 249 00:14:48,360 --> 00:14:52,680 Speaker 1: you speak of, though, this tricky act right between preventing 250 00:14:52,720 --> 00:14:56,120 Speaker 1: the financial system from creating again and creating an environment 251 00:14:56,120 --> 00:14:59,440 Speaker 1: in which, uh, you know, the handmaidens of capitalism can 252 00:14:59,480 --> 00:15:05,560 Speaker 1: actually earn a return. Um, is there any reason those 253 00:15:05,600 --> 00:15:07,560 Speaker 1: balances are going to be better struck between now on 254 00:15:07,600 --> 00:15:09,120 Speaker 1: the end of the year or is this where we 255 00:15:09,200 --> 00:15:13,560 Speaker 1: are for now and for a while yet you know, uh, um, 256 00:15:14,520 --> 00:15:17,440 Speaker 1: the markets I think are having some difficult times adjusting 257 00:15:17,480 --> 00:15:20,320 Speaker 1: to what's happened with commodity prices and oil in particular, 258 00:15:20,640 --> 00:15:23,160 Speaker 1: what's going on in China clearly has had a very 259 00:15:23,160 --> 00:15:27,120 Speaker 1: big impact. Um. This whole slow growth is a challenge 260 00:15:27,160 --> 00:15:32,080 Speaker 1: for the markets. The inflation expectations are incredibly low. That's 261 00:15:32,160 --> 00:15:35,280 Speaker 1: leading to some central banks talking about negative interest rates. 262 00:15:35,640 --> 00:15:39,000 Speaker 1: This is completely unchartered territory. You know how the financial 263 00:15:39,040 --> 00:15:42,160 Speaker 1: markets would respond to negative answers strates on the scale 264 00:15:42,160 --> 00:15:45,080 Speaker 1: that are being discussed is we just don't know. Um. 265 00:15:45,200 --> 00:15:48,920 Speaker 1: So the markets will be challenging uh this year. But 266 00:15:49,000 --> 00:15:52,000 Speaker 1: the banking industry is so much stronger now than it 267 00:15:52,160 --> 00:15:54,600 Speaker 1: was in two thousand and eight. The capital levels are 268 00:15:54,640 --> 00:15:58,280 Speaker 1: completely different, the liquidity levels are completely different. We have 269 00:15:58,480 --> 00:16:01,360 Speaker 1: such a more robust banking industry than we did back then, 270 00:16:01,680 --> 00:16:04,240 Speaker 1: so it is a safer group of banks dealing with 271 00:16:04,280 --> 00:16:08,000 Speaker 1: the challenging market. The ECB is going to make his 272 00:16:08,120 --> 00:16:10,840 Speaker 1: latest policy announcement just a few minutes from now at 273 00:16:10,840 --> 00:16:15,720 Speaker 1: seven forty five Eastern time this morning. There's a widespread 274 00:16:15,800 --> 00:16:18,160 Speaker 1: expectation that they're going to be even more accommodative, that 275 00:16:18,240 --> 00:16:21,160 Speaker 1: they have been. Negative interest rates aren't an issue for 276 00:16:21,200 --> 00:16:24,080 Speaker 1: your UK consumer business, but you're operating in the European 277 00:16:24,080 --> 00:16:27,120 Speaker 1: banking environment. How challenging are negative interest rates for a 278 00:16:27,120 --> 00:16:31,560 Speaker 1: bank like Barclays. The negative interest rates are are are 279 00:16:31,640 --> 00:16:34,160 Speaker 1: a reality day, but on a very limited scale. With 280 00:16:34,240 --> 00:16:37,040 Speaker 1: the negative interest rates right now are essentially only on 281 00:16:37,200 --> 00:16:40,880 Speaker 1: access reserves. The interest rates for the consumer. The interest 282 00:16:41,000 --> 00:16:44,880 Speaker 1: rates across the banking industry itself are still positive. So 283 00:16:45,040 --> 00:16:46,800 Speaker 1: we're a long way ago, I think, from being a 284 00:16:46,920 --> 00:16:50,840 Speaker 1: very disruptive influence in the banking industry, but we've got 285 00:16:50,840 --> 00:16:53,360 Speaker 1: to keep an eye on it. And with inflation expectations 286 00:16:53,400 --> 00:16:56,920 Speaker 1: so low, it's a challenge for the investment banks excuse 287 00:16:57,120 --> 00:16:59,840 Speaker 1: for the central banks to continue to be every day 288 00:17:00,080 --> 00:17:03,400 Speaker 1: more accommodative and to try to push the economy forward 289 00:17:03,400 --> 00:17:08,520 Speaker 1: through that accommodation that the aggressive monetary policy, I think 290 00:17:08,960 --> 00:17:11,600 Speaker 1: is having every day less and less ability to get 291 00:17:11,640 --> 00:17:13,480 Speaker 1: the economy of moving forward, and that's a challenge for 292 00:17:13,480 --> 00:17:16,639 Speaker 1: all of us. So, but more specifically is as it 293 00:17:16,640 --> 00:17:20,200 Speaker 1: concerns the banking industry. I mean, don't negative interest rates 294 00:17:20,440 --> 00:17:24,520 Speaker 1: cause bank profits to shrink? Don't they disincentivize cross border lending? 295 00:17:24,760 --> 00:17:28,680 Speaker 1: Don't they create nonlinear effects in bank funding. The big, 296 00:17:29,240 --> 00:17:33,480 Speaker 1: the big factor which is impacting bank profitability in terms 297 00:17:33,560 --> 00:17:37,560 Speaker 1: of the retail banking practice and whatnot are low interest rates. 298 00:17:38,080 --> 00:17:40,439 Speaker 1: Um uh, you know, the net interest margin of banks 299 00:17:40,440 --> 00:17:43,160 Speaker 1: has been shrinking because we have low interest rates across 300 00:17:43,200 --> 00:17:46,200 Speaker 1: the board. So sure that is a weight. But most 301 00:17:46,200 --> 00:17:49,119 Speaker 1: of the retail banking industry is doing quite well Barkley's. 302 00:17:49,200 --> 00:17:51,840 Speaker 1: You know, our return on equity in our in our 303 00:17:51,880 --> 00:17:53,960 Speaker 1: retail bank and our credit card business are in the 304 00:17:54,000 --> 00:17:56,280 Speaker 1: mid teens. It's a great business for us. You know, 305 00:17:56,320 --> 00:18:00,000 Speaker 1: as we're talking, you know, we are a hugely important 306 00:18:00,240 --> 00:18:05,560 Speaker 1: part of the UK economy. About of the United Kingdom. 307 00:18:05,640 --> 00:18:09,679 Speaker 1: GDP every day goes through the payment pipes of Barkley's, 308 00:18:09,680 --> 00:18:12,520 Speaker 1: whether it's our Barkley Card or whether it's our retail branches. 309 00:18:12,880 --> 00:18:16,600 Speaker 1: We are inexorably linked with the economic success of the 310 00:18:16,720 --> 00:18:20,040 Speaker 1: UK and uh so these are difficult times, but we're 311 00:18:20,080 --> 00:18:22,280 Speaker 1: doing well and uh in our in our position in 312 00:18:22,320 --> 00:18:25,080 Speaker 1: the UK retail market is is great. Chess. You've had 313 00:18:25,080 --> 00:18:28,040 Speaker 1: a chance now to talk about the bank's new strategy 314 00:18:28,160 --> 00:18:31,440 Speaker 1: with some of your largest investors, and it's fair to 315 00:18:31,480 --> 00:18:34,200 Speaker 1: say some of them are deeply skeptical. What's the hardest 316 00:18:34,280 --> 00:18:41,120 Speaker 1: question you've had to answer? Um, You know, we've made 317 00:18:41,160 --> 00:18:45,360 Speaker 1: two strategic decisions in the first one hundred days. UH 318 00:18:45,480 --> 00:18:49,440 Speaker 1: one was to sell to a deconsolidating non controlling position 319 00:18:49,440 --> 00:18:52,520 Speaker 1: in Africa. Barkley's has been in Africa for over a 320 00:18:52,560 --> 00:18:56,080 Speaker 1: hundred years, in places like Kenya and Uganda. To make 321 00:18:56,119 --> 00:18:59,000 Speaker 1: that decision to pull back from the continent has been very, 322 00:18:59,080 --> 00:19:01,879 Speaker 1: very hard. So that's tough question. And then the second 323 00:19:01,880 --> 00:19:04,920 Speaker 1: one is the investment banking industry. You know, our strategy 324 00:19:05,000 --> 00:19:08,440 Speaker 1: is to be a transatlantic consumer, corporate and investment bank, 325 00:19:08,880 --> 00:19:12,280 Speaker 1: with with our anchors being New York and London, the 326 00:19:12,280 --> 00:19:16,000 Speaker 1: two financial capitals of the world. Investment banking as an 327 00:19:16,040 --> 00:19:19,040 Speaker 1: industry right now does not cover its cost of capital. 328 00:19:19,280 --> 00:19:22,480 Speaker 1: So if you look across all the investment banks, on average, 329 00:19:22,560 --> 00:19:25,720 Speaker 1: they do not generate a sufficient return to earn the 330 00:19:25,760 --> 00:19:28,760 Speaker 1: capital that they have. That's a fundamental flaw in the 331 00:19:28,800 --> 00:19:32,040 Speaker 1: financial system and it's a tough answered and it's a 332 00:19:32,080 --> 00:19:34,200 Speaker 1: tough question to answer. When is that going to change? 333 00:19:34,480 --> 00:19:37,320 Speaker 1: It is? Indeed, as we welcome Bloomberg television viewers and 334 00:19:37,440 --> 00:19:40,640 Speaker 1: radio listeners around the world to this conversation with Jess Daily. Jess, 335 00:19:40,680 --> 00:19:43,600 Speaker 1: I'm gonna say that I'm surprised that you didn't add 336 00:19:43,640 --> 00:19:46,800 Speaker 1: a third difficult question there, which was the dividend cut. 337 00:19:47,560 --> 00:19:50,200 Speaker 1: Um it came as a shock, That's fair to say 338 00:19:50,240 --> 00:19:54,080 Speaker 1: to many shareholders. Why cut the dividend when it saves 339 00:19:54,119 --> 00:19:57,200 Speaker 1: you roughly just about a half billion dollars a year 340 00:19:57,760 --> 00:20:01,159 Speaker 1: and there's such a strong shareholder preference income in the 341 00:20:01,280 --> 00:20:04,159 Speaker 1: UK more so than in the US. UH one, we 342 00:20:04,320 --> 00:20:06,760 Speaker 1: will continue to pay a dividend, but we did reduce 343 00:20:06,840 --> 00:20:12,080 Speaker 1: the dividend by roughly UH for two years sixteen and 344 00:20:12,080 --> 00:20:16,119 Speaker 1: and seventeen. We have a core franchise of our consumer 345 00:20:16,440 --> 00:20:20,119 Speaker 1: credit card business, corporate bank and investment bank that is 346 00:20:20,320 --> 00:20:23,679 Speaker 1: a great investment bank franchise here in New York and 347 00:20:23,840 --> 00:20:26,400 Speaker 1: in London, and you know, being one of the few 348 00:20:26,480 --> 00:20:29,040 Speaker 1: European investment banks out there today. I think it's a 349 00:20:29,080 --> 00:20:34,480 Speaker 1: competitive advantage for Barkley's. How though, does ring fencing right, 350 00:20:34,520 --> 00:20:37,199 Speaker 1: the funding cost that that imposes on your bank, the 351 00:20:37,320 --> 00:20:41,240 Speaker 1: UK balance sheet tax, bonus caps and the senior managed 352 00:20:41,280 --> 00:20:44,359 Speaker 1: regime not put you at a disadvantage relative to say, 353 00:20:44,760 --> 00:20:48,880 Speaker 1: JP Morrigan, Bank of America, Citygroup, Goldman Sacks, Morgan, Stanley, 354 00:20:48,960 --> 00:20:51,840 Speaker 1: The list goes on. You know, having worked at JP Morgan, 355 00:20:52,040 --> 00:20:53,960 Speaker 1: I sure there's no one they're saying, Boy, we have 356 00:20:53,960 --> 00:20:56,600 Speaker 1: a huge competitive advantage because our regulators are so nice 357 00:20:56,640 --> 00:20:59,800 Speaker 1: to us. I mean everyone is facing the regulatory challenge 358 00:20:59,840 --> 00:21:03,639 Speaker 1: of desk of adjusting to the new realities of the 359 00:21:03,680 --> 00:21:08,760 Speaker 1: financial markets. I fundamentally believe that the UK regulators want 360 00:21:08,840 --> 00:21:13,879 Speaker 1: to see a British bank within the leading investment banking group. Um. 361 00:21:14,000 --> 00:21:17,720 Speaker 1: Remember it is, however, only of our risk capital. You know, 362 00:21:17,840 --> 00:21:22,600 Speaker 1: we are predominantly a retail consumer corporate bank. Um. But 363 00:21:22,680 --> 00:21:24,960 Speaker 1: I think the UK would love to see a British 364 00:21:24,960 --> 00:21:28,240 Speaker 1: bank as a major player in the world's capital markets. 365 00:21:28,240 --> 00:21:30,800 Speaker 1: And that's who Barkley is today. Okay, since you've created 366 00:21:30,800 --> 00:21:36,000 Speaker 1: an opportunity for me, I want to play a scenario game. 367 00:21:37,440 --> 00:21:40,600 Speaker 1: Pretend I'm a multinational CEO. Remember this is the world. 368 00:21:40,640 --> 00:21:44,720 Speaker 1: To make believe my company is active in capital markets. 369 00:21:44,760 --> 00:21:47,600 Speaker 1: I do a lot of mergers and acquisition. Tens of 370 00:21:47,680 --> 00:21:51,280 Speaker 1: millions in fees are at stake. I've decided to hold 371 00:21:51,280 --> 00:21:54,520 Speaker 1: my own little bake off, right, JP Morgan or Barkley's 372 00:21:54,640 --> 00:21:57,359 Speaker 1: Jess Daly is called in to close the deal. What's 373 00:21:57,359 --> 00:22:02,520 Speaker 1: your pitch to me. There's so much intellectual talent in 374 00:22:02,640 --> 00:22:05,679 Speaker 1: Barkley's and and I think we manage this bank with 375 00:22:05,720 --> 00:22:07,639 Speaker 1: the set of values that I'm very proud of and 376 00:22:07,640 --> 00:22:09,760 Speaker 1: hopefully all the people of Barkleys are very proud of. 377 00:22:10,040 --> 00:22:12,200 Speaker 1: It's just the quality of our advice. You know, we're 378 00:22:12,200 --> 00:22:15,440 Speaker 1: gonna give our best foot forward. UH will give their 379 00:22:15,440 --> 00:22:19,440 Speaker 1: client our best ideas. We will our our thoughts will 380 00:22:19,480 --> 00:22:22,160 Speaker 1: be what is in their best interest, not what gets 381 00:22:22,200 --> 00:22:25,679 Speaker 1: a transaction done. JP Morgan is an outstanding bank, but 382 00:22:25,760 --> 00:22:28,639 Speaker 1: so is Barkley's, and so we'll let the CEO decide 383 00:22:28,760 --> 00:22:31,080 Speaker 1: between the two. All right, Now, the argument number two 384 00:22:31,119 --> 00:22:33,840 Speaker 1: against keeping the investment bank, it's simply not profitable enough. Right, 385 00:22:34,000 --> 00:22:36,320 Speaker 1: Look at the return on equity or tangible equity if 386 00:22:36,320 --> 00:22:39,719 Speaker 1: you prefer, look at the cost income ratio, what they 387 00:22:39,760 --> 00:22:42,919 Speaker 1: call the efficiency ratio. Here, look at your standing and 388 00:22:42,960 --> 00:22:46,560 Speaker 1: some of the most profitable, high margin businesses and investment banking. 389 00:22:46,640 --> 00:22:49,439 Speaker 1: You're not where you used to be, you know, like 390 00:22:49,480 --> 00:22:52,160 Speaker 1: a lot of investment banks not. We have dramatically had 391 00:22:52,200 --> 00:22:54,600 Speaker 1: to reduce our risk weighted assets. So we've taken the 392 00:22:54,760 --> 00:22:58,280 Speaker 1: risk on our investment banks balance sheet down in half 393 00:22:59,080 --> 00:23:02,720 Speaker 1: uh face with that headwind. Actually, from two thousand and 394 00:23:02,760 --> 00:23:05,760 Speaker 1: fourteen to fifteen, we doubled the return on Actually we 395 00:23:05,800 --> 00:23:08,520 Speaker 1: doubled the property. We have a long way to go. 396 00:23:08,920 --> 00:23:11,440 Speaker 1: We've got to do a lot on managing the costs 397 00:23:11,840 --> 00:23:15,760 Speaker 1: in our investment bank. So we won't rest until we 398 00:23:15,840 --> 00:23:18,600 Speaker 1: deliver an investment bank a return on actually that covers 399 00:23:18,640 --> 00:23:21,200 Speaker 1: the cost of capital. But that's what we're gonna accomplish. Okay, 400 00:23:21,200 --> 00:23:24,880 Speaker 1: but that's an industry wide problem, right and wishing isn't 401 00:23:24,920 --> 00:23:27,639 Speaker 1: going to fix it. We're not gonna wish. We're going 402 00:23:27,680 --> 00:23:30,959 Speaker 1: to execute here at Barclays to get there. But I 403 00:23:31,000 --> 00:23:33,960 Speaker 1: do fundamentally believe that if we're going to rely on 404 00:23:34,040 --> 00:23:36,720 Speaker 1: the global capital markets, which is you know, mutual funds 405 00:23:36,760 --> 00:23:39,800 Speaker 1: and pension funds buying debt and equity issued by companies. 406 00:23:40,160 --> 00:23:43,520 Speaker 1: I don't believe the world will feel safe if we're 407 00:23:43,560 --> 00:23:46,600 Speaker 1: relying on a global capital markets where the intermediaries, the 408 00:23:46,600 --> 00:23:50,120 Speaker 1: investment banks, can't raise capital, can't earn a faery turn 409 00:23:50,160 --> 00:23:53,240 Speaker 1: to their shareholders. It's just not a stable platform to 410 00:23:53,320 --> 00:23:56,400 Speaker 1: fund the world's economy. So how long till it course corrects? 411 00:23:56,560 --> 00:24:01,000 Speaker 1: What's the cataalist because I think it's happening now. Oh 412 00:24:01,000 --> 00:24:03,800 Speaker 1: for sure. I think all of the banks, I think 413 00:24:03,840 --> 00:24:06,080 Speaker 1: are looking at how to manage these balance sheets with 414 00:24:06,160 --> 00:24:08,399 Speaker 1: far less risk on them, in a way to deliver 415 00:24:08,440 --> 00:24:10,679 Speaker 1: the capital markets to clients, but in a way that 416 00:24:10,720 --> 00:24:14,840 Speaker 1: delivers profitability to our to our our our shoolders. Okay, 417 00:24:14,880 --> 00:24:17,520 Speaker 1: and here's the third argument. The culture simply can't be fixed. Right. 418 00:24:17,680 --> 00:24:21,560 Speaker 1: Your bank is paid twenty billion pounds in misconduct finds, 419 00:24:21,560 --> 00:24:24,320 Speaker 1: penalties and other costs wiped out your profit for what 420 00:24:24,400 --> 00:24:26,960 Speaker 1: five years? Most of that started here at the investment bank, 421 00:24:27,560 --> 00:24:30,080 Speaker 1: you know, I do. I've said this before. I do 422 00:24:30,160 --> 00:24:33,480 Speaker 1: believe that Wall Street lost its way, uh in the 423 00:24:33,600 --> 00:24:36,399 Speaker 1: in the late nineties. Uh. I do believe that money 424 00:24:36,480 --> 00:24:40,399 Speaker 1: became too much of a motivational factor. I think banking 425 00:24:40,440 --> 00:24:43,000 Speaker 1: has got to reverse back to the time when it 426 00:24:43,080 --> 00:24:46,840 Speaker 1: was a profession. When uh, being a practitioner in the 427 00:24:46,880 --> 00:24:49,640 Speaker 1: profession of finance it was like being a lawyer or 428 00:24:49,640 --> 00:24:53,040 Speaker 1: being a doctor. Um, we've got a lot to atone for. 429 00:24:53,480 --> 00:24:56,480 Speaker 1: We made a lot of mistakes, but have no doubt 430 00:24:56,760 --> 00:24:59,600 Speaker 1: the only existential risk of Barkley's is if we get 431 00:24:59,640 --> 00:25:02,359 Speaker 1: it wrong in the future. And on on conduct, and 432 00:25:02,440 --> 00:25:04,399 Speaker 1: everyone in this room knows that. Why are you certain 433 00:25:04,440 --> 00:25:07,040 Speaker 1: that you can change that conduct and change that culture 434 00:25:07,400 --> 00:25:10,479 Speaker 1: because I started in the banking industry that had the 435 00:25:10,560 --> 00:25:13,400 Speaker 1: right conduct, that had the right culture. So it's it's 436 00:25:13,400 --> 00:25:16,199 Speaker 1: just going back to something that I've seen before. And 437 00:25:16,200 --> 00:25:18,720 Speaker 1: I think everybody in this room wants to get there. 438 00:25:18,960 --> 00:25:21,960 Speaker 1: But there are still in this room, I'm sure, unreasonable 439 00:25:22,000 --> 00:25:24,520 Speaker 1: expectations when it comes to compensation. You've talked about the 440 00:25:24,560 --> 00:25:29,640 Speaker 1: gulf right between expectations and you know what's reasonable, what's rational, 441 00:25:29,760 --> 00:25:32,480 Speaker 1: and you close the gap. We've reduced the bonus pool 442 00:25:32,480 --> 00:25:35,359 Speaker 1: at Barkney's, for instance, by over half in the last 443 00:25:35,440 --> 00:25:37,880 Speaker 1: four years. And they're all still here and they're all 444 00:25:37,920 --> 00:25:40,800 Speaker 1: working hard, and and you know we will get the 445 00:25:40,840 --> 00:25:44,520 Speaker 1: culture in the right place. We need to pay uh competitively. 446 00:25:44,760 --> 00:25:47,840 Speaker 1: The people aren't here just because of the check. They 447 00:25:47,840 --> 00:25:49,280 Speaker 1: want to be here to do the right things for 448 00:25:49,280 --> 00:25:51,280 Speaker 1: our clients. Don't You have to be able to draw 449 00:25:51,359 --> 00:25:54,960 Speaker 1: the line on pay even if it costs you some talent. Sure, 450 00:25:55,480 --> 00:25:58,160 Speaker 1: you know we won't. I'm not gonna I'm not gonna 451 00:25:58,200 --> 00:26:01,760 Speaker 1: buy someone to come from Barkley's never, So people have 452 00:26:01,840 --> 00:26:04,479 Speaker 1: to come here and stay here. For reasons other than 453 00:26:04,520 --> 00:26:07,360 Speaker 1: monetary game. But are you buying people for example, when 454 00:26:07,359 --> 00:26:09,439 Speaker 1: we talk about your senior management team, are you buying 455 00:26:09,560 --> 00:26:12,520 Speaker 1: people from other places? For example? You know Mr Compton, 456 00:26:12,640 --> 00:26:15,720 Speaker 1: Mr Vina Krishnan, they left JP Morgan. I did they 457 00:26:15,800 --> 00:26:18,160 Speaker 1: leave JP Morgan for a pact? I can't imagine they did, 458 00:26:18,640 --> 00:26:21,400 Speaker 1: but there's no guarantee compensation for them. They came here 459 00:26:21,400 --> 00:26:23,840 Speaker 1: because they want to help Barkley's become a great institution. 460 00:26:24,720 --> 00:26:27,880 Speaker 1: You believe that, yes, I do. What is the one 461 00:26:28,200 --> 00:26:31,320 Speaker 1: thing you need to do if you're going to transform 462 00:26:31,400 --> 00:26:34,880 Speaker 1: this room right into a Roman galleon where everybody's roaring 463 00:26:34,880 --> 00:26:39,600 Speaker 1: in your direction, you know, uh, to reinsert the values 464 00:26:39,920 --> 00:26:43,240 Speaker 1: of of of being a banker as a profession. You know, 465 00:26:44,200 --> 00:26:47,440 Speaker 1: realizing that the real asset of of a banker is 466 00:26:47,480 --> 00:26:50,200 Speaker 1: the trust that our consumers and clients place in us 467 00:26:50,640 --> 00:26:53,280 Speaker 1: and you and you earn that trust by always acting 468 00:26:53,359 --> 00:26:56,680 Speaker 1: with the level of integrity that stands you out amongst 469 00:26:56,680 --> 00:26:59,440 Speaker 1: the industry. And I want people at Barkley's to feel 470 00:26:59,480 --> 00:27:01,639 Speaker 1: that an act that way, and I believe that we 471 00:27:01,680 --> 00:27:03,679 Speaker 1: can do that as a bank. What's the single biggest 472 00:27:03,760 --> 00:27:07,359 Speaker 1: risk to this company? The single biggest with this company. 473 00:27:07,480 --> 00:27:13,520 Speaker 1: Is um UH someone violating the values of this firm. 474 00:27:13,680 --> 00:27:17,200 Speaker 1: One last question here, briggsit right ECB decision coming any moment. 475 00:27:17,240 --> 00:27:19,919 Speaker 1: But another big topic for Europe is the potential for 476 00:27:19,920 --> 00:27:22,399 Speaker 1: a Brexit. Stewart go Over says that HSPC would have 477 00:27:22,440 --> 00:27:26,000 Speaker 1: to move a thousand people from the UK to Paris 478 00:27:26,560 --> 00:27:28,800 Speaker 1: in the event of a Brexit, which is not out 479 00:27:28,800 --> 00:27:31,439 Speaker 1: of the question. I have to imagine you've run the numbers. 480 00:27:31,440 --> 00:27:34,640 Speaker 1: What would Barkley's do you know? We've come out publicly. 481 00:27:34,640 --> 00:27:37,880 Speaker 1: Our chairman Uh in his Trammelan letters said we believe 482 00:27:38,560 --> 00:27:41,960 Speaker 1: the best thing for our customers and our clients in 483 00:27:42,000 --> 00:27:44,760 Speaker 1: the United Kingdom is for the UK to stay part 484 00:27:44,880 --> 00:27:48,119 Speaker 1: of the European But if it doesn't, you know, we 485 00:27:48,240 --> 00:27:52,280 Speaker 1: will suffer because our customers and our clients will suffer 486 00:27:52,480 --> 00:27:56,120 Speaker 1: in the UK who we're a UK bank, so inside 487 00:27:56,119 --> 00:27:58,040 Speaker 1: of the United Kingdom we will be fine, but if 488 00:27:58,040 --> 00:28:01,000 Speaker 1: our clients suffer, we suffer. And therefore we've made the 489 00:28:01,040 --> 00:28:04,760 Speaker 1: recommendation that that the UK vote to stay inside the 490 00:28:04,760 --> 00:28:08,440 Speaker 1: European Union just on behalf of Bloomberg television viewers worldwide, 491 00:28:08,480 --> 00:28:10,320 Speaker 1: Bloomberg radio listeners world I don't want to thank you 492 00:28:10,359 --> 00:28:12,840 Speaker 1: for this opportunity. David. That is Just Staley. He is 493 00:28:12,880 --> 00:28:15,560 Speaker 1: the chief executive officer at Barkley's. We're here in midtime. Man. 494 00:28:17,440 --> 00:28:21,160 Speaker 1: That is Bloomberg Eric Shatska with Barclay's his new CEO, 495 00:28:21,440 --> 00:28:26,719 Speaker 1: Jess Staley, suggesting that banks aren't challenged these days, particularly 496 00:28:26,760 --> 00:28:29,920 Speaker 1: with central banks still struggling to find ways to stimulate 497 00:28:29,960 --> 00:28:33,760 Speaker 1: global economic growth, but that Barkley's has a good future 498 00:28:33,920 --> 00:28:37,240 Speaker 1: in front of them. The stock is up by about 499 00:28:37,240 --> 00:28:40,520 Speaker 1: a tenth of a percent since the interview began. I 500 00:28:40,600 --> 00:28:43,440 Speaker 1: know it was great about it, Mike, was his quiet statement. 501 00:28:43,600 --> 00:28:46,680 Speaker 1: It used to be like being a doctor or a lawyer. 502 00:28:48,000 --> 00:28:52,000 Speaker 1: That is true. I know those younger don't believe it 503 00:28:52,200 --> 00:28:56,360 Speaker 1: for the madness of the media affecting financial things. It 504 00:28:56,440 --> 00:29:00,000 Speaker 1: was actually like that the world has changed. It has changed. 505 00:29:00,840 --> 00:29:02,640 Speaker 1: Now it's time for the Bloomberg n j I T 506 00:29:02,840 --> 00:29:05,560 Speaker 1: STEM Report, brought to you by New Jersey Institute of Technology, 507 00:29:05,560 --> 00:29:08,200 Speaker 1: partnering with government and industry to apply the university's world 508 00:29:08,240 --> 00:29:11,480 Speaker 1: class research assets to innovate and spur economic growth. Learn 509 00:29:11,560 --> 00:29:13,960 Speaker 1: more at n j I T dot e d U 510 00:29:14,280 --> 00:29:18,440 Speaker 1: Here's Bob Move. Michael Hughes was making news in science, technology, engineering, 511 00:29:18,520 --> 00:29:21,160 Speaker 1: and math. All U S drone operators would for the 512 00:29:21,160 --> 00:29:24,960 Speaker 1: first time have to prove they understand aviation regulations under 513 00:29:24,960 --> 00:29:28,360 Speaker 1: broad legislation introduced in the Senate. The bill setting policy 514 00:29:28,400 --> 00:29:32,040 Speaker 1: for the Federal Aviation Administration includes several new drone provisions, 515 00:29:32,080 --> 00:29:36,280 Speaker 1: including a requirement for unmanned flyers to pass an online test. 516 00:29:36,720 --> 00:29:38,920 Speaker 1: There are signs the European Union is gearing up to 517 00:29:38,960 --> 00:29:42,200 Speaker 1: send Google and anti trust complaint over its Android mobile 518 00:29:42,240 --> 00:29:44,920 Speaker 1: phone system, according to people familiar with the probe, adding 519 00:29:44,960 --> 00:29:47,400 Speaker 1: to the growing list of regulatory woes for the company 520 00:29:47,440 --> 00:29:50,480 Speaker 1: on the continent. The EU has voiced concerns over Google's 521 00:29:50,520 --> 00:29:54,040 Speaker 1: bundling of apps such as Maps, YouTube, and Chrome software, 522 00:29:54,080 --> 00:29:57,680 Speaker 1: with Android questioning whether the practice harms independent developers of 523 00:29:57,720 --> 00:30:00,960 Speaker 1: competing apps. And Bloomberg Intelligence reports are ruling in the 524 00:30:01,000 --> 00:30:04,120 Speaker 1: net neutrality legal challenge to rules borrowing I s p 525 00:30:04,280 --> 00:30:07,640 Speaker 1: s from blocking, degrading, or favoring Internet traffic. It's likely 526 00:30:07,680 --> 00:30:10,240 Speaker 1: before the third quarter A T and T, Century Link 527 00:30:10,280 --> 00:30:14,160 Speaker 1: and associations for wired and wireless internet service providers have 528 00:30:14,240 --> 00:30:17,880 Speaker 1: attacked the FCCS net neutrality rules in court, and that's 529 00:30:17,920 --> 00:30:21,280 Speaker 1: this morning's Bloomberg j I T. Step report, Bama and 530 00:30:21,360 --> 00:30:24,600 Speaker 1: thank you very much. Well, we are now about six 531 00:30:24,640 --> 00:30:27,680 Speaker 1: minutes away Tom from the ECB decision that everybody is 532 00:30:27,720 --> 00:30:30,320 Speaker 1: waiting at least part of it, the rates decision. What 533 00:30:30,480 --> 00:30:35,320 Speaker 1: is the history of headlines? Uh coming out at seven, 534 00:30:35,800 --> 00:30:39,680 Speaker 1: followed up by press conference. How does he do that? 535 00:30:39,840 --> 00:30:42,680 Speaker 1: He does the headlines obviously, the headlines come out and 536 00:30:42,760 --> 00:30:44,880 Speaker 1: give us what the rates are going to. Just tell 537 00:30:44,920 --> 00:30:48,920 Speaker 1: you what the rates bring. The actual mechanists, the actual mechanism, 538 00:30:48,960 --> 00:30:51,640 Speaker 1: and in this case they are certainly the main refinancing rate. 539 00:30:51,640 --> 00:30:54,480 Speaker 1: Their benchmark rate is at five basis points. That hasn't 540 00:30:54,520 --> 00:30:57,400 Speaker 1: been changed in quite a while. It's the deposit rate, 541 00:30:57,480 --> 00:31:01,240 Speaker 1: the rate that banks get charged for keeping money at 542 00:31:01,240 --> 00:31:04,640 Speaker 1: the ECB. They have been maneuvering and that is negative 543 00:31:04,760 --> 00:31:07,680 Speaker 1: thirty mass points. Now the forecast is they may add 544 00:31:07,680 --> 00:31:10,640 Speaker 1: another tan look across all of Bloomberg Digital Media for 545 00:31:10,680 --> 00:31:13,680 Speaker 1: our coverage today of the economics and the challenges Mr 546 00:31:13,760 --> 00:31:16,960 Speaker 1: drog faces. Coming up next the e c V announcement. 547 00:31:17,040 --> 00:31:21,960 Speaker 1: This is Bloomberg Surveillance, but cutting get out of the 548 00:31:21,960 --> 00:31:23,880 Speaker 1: opening bell, brought to you by the Jeep Grand Cherokee, 549 00:31:23,920 --> 00:31:26,240 Speaker 1: the most aboarded SUV Ever, the Grand Cherokee continues to 550 00:31:26,320 --> 00:31:28,760 Speaker 1: raise the bar. Where that's the luxurious interior and legendary 551 00:31:28,880 --> 00:31:36,280 Speaker 1: four by four capability. Drive on at your local jeep dealer. Today, 552 00:31:37,680 --> 00:31:41,080 Speaker 1: Global business news twenty four hours a day at Bloomberg 553 00:31:41,120 --> 00:31:44,200 Speaker 1: dot com, the Radio plus mobile app, and on your radio. 554 00:31:44,480 --> 00:31:48,200 Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow. 555 00:31:48,240 --> 00:31:50,320 Speaker 1: This updates brought to you by eisener Amper. Or An 556 00:31:50,400 --> 00:31:53,760 Speaker 1: entrepreneurs face challenges like choosing a business structure or access 557 00:31:53,760 --> 00:31:57,080 Speaker 1: to capital. They call the accountants and advisers at eisener Amper, 558 00:31:57,120 --> 00:32:00,440 Speaker 1: connect with them eisener Amper dot com, slash Tech, and 559 00:32:00,480 --> 00:32:03,360 Speaker 1: the European Central Bank lower ring its benchmark interest rate 560 00:32:03,440 --> 00:32:06,360 Speaker 1: to zero and cutting its deposit facility rate to minus 561 00:32:06,760 --> 00:32:09,240 Speaker 1: zero point four percent. Of course, we have much more 562 00:32:09,240 --> 00:32:12,560 Speaker 1: on this coming up as Bloomberg surveillance continues. Just looking 563 00:32:12,560 --> 00:32:15,560 Speaker 1: at market reaction, those stocks are jumping in Europe. The 564 00:32:15,640 --> 00:32:18,440 Speaker 1: decks in Germany now up two point two percent, the 565 00:32:18,560 --> 00:32:21,080 Speaker 1: CAC in Paris up two point one percent, FT one 566 00:32:21,160 --> 00:32:24,400 Speaker 1: hundred up six tenths percent, SNP E mini futures now 567 00:32:24,440 --> 00:32:26,840 Speaker 1: up eighteen points, and DOWI mini futures up a hundred 568 00:32:26,880 --> 00:32:30,360 Speaker 1: nineteen NASA docimny futures up forty one ten year treasury 569 00:32:30,400 --> 00:32:33,280 Speaker 1: up four thirty seconds, the yield one point eight six percent. 570 00:32:33,360 --> 00:32:36,600 Speaker 1: And that's a bloomberg business flash, Tom and Mike. Thank you. 571 00:32:36,680 --> 00:32:39,520 Speaker 1: Karen Moscow. Well, it looks like Mario Draggy is throwing 572 00:32:39,560 --> 00:32:44,880 Speaker 1: the book at the markets, making many changes to monetary policy. 573 00:32:45,240 --> 00:32:48,680 Speaker 1: For the European Central Bank, they cut the main financing rate, 574 00:32:49,280 --> 00:32:52,440 Speaker 1: their main benchmark rate to zero, that's a five basis 575 00:32:52,440 --> 00:32:57,520 Speaker 1: point cut. They lower the marginal lending facility to five 576 00:32:57,560 --> 00:33:00,880 Speaker 1: basis points, and they cut the deposit rate to negative 577 00:33:01,000 --> 00:33:05,680 Speaker 1: forty basis points attend basis point cut which had been expected. 578 00:33:05,960 --> 00:33:09,640 Speaker 1: They are also increasing q E eighty billion euros a 579 00:33:09,680 --> 00:33:13,080 Speaker 1: month another twenty billion a month. They are also announcing 580 00:33:13,200 --> 00:33:17,320 Speaker 1: a new series of long term repot operations with banks, 581 00:33:17,360 --> 00:33:21,640 Speaker 1: loans to banks. They're expanding q E to include non 582 00:33:21,680 --> 00:33:26,280 Speaker 1: bank corporate bonds. That is a very interesting change by 583 00:33:26,480 --> 00:33:28,240 Speaker 1: the e c B. A lot of people did not 584 00:33:28,360 --> 00:33:31,800 Speaker 1: think they would get to their to that yet. Mario 585 00:33:31,880 --> 00:33:35,080 Speaker 1: Dragi says that, or at least the ECB says that 586 00:33:35,200 --> 00:33:38,760 Speaker 1: the measures will take effect on March sixte so an 587 00:33:38,960 --> 00:33:44,320 Speaker 1: enormous amount of changes in European monetary policy, Tom, and 588 00:33:44,360 --> 00:33:46,320 Speaker 1: you see it with a movement and yields. Yields went 589 00:33:46,400 --> 00:33:48,680 Speaker 1: lower and more negative. For the German two year they 590 00:33:48,680 --> 00:33:52,840 Speaker 1: reversed sharply. I would suggest off the corporate paper announcement, 591 00:33:53,080 --> 00:33:56,200 Speaker 1: the German two year negative point five three two is 592 00:33:56,240 --> 00:34:00,720 Speaker 1: fracturally less negative, a more positive movement on the German 593 00:34:01,120 --> 00:34:04,280 Speaker 1: at two year. The euro craters not back to any 594 00:34:04,400 --> 00:34:08,319 Speaker 1: kind of support order a two standard deviation move, but 595 00:34:08,360 --> 00:34:10,839 Speaker 1: a one o eight seventy five is in a full 596 00:34:10,920 --> 00:34:14,319 Speaker 1: hundred and twenty six pips for the Euro. This is 597 00:34:14,320 --> 00:34:18,200 Speaker 1: a weaker euro, Mike. I would put the mark on 598 00:34:19,280 --> 00:34:22,520 Speaker 1: support in the vicinity of one oh eight twenty seven 599 00:34:22,920 --> 00:34:26,719 Speaker 1: fifty or sixty pips away, and two standard deviations is 600 00:34:26,719 --> 00:34:29,200 Speaker 1: one oh eight thirteen. So we're a bit of ways 601 00:34:29,520 --> 00:34:32,680 Speaker 1: from any kind of breakdown in the Euro, even though 602 00:34:32,719 --> 00:34:35,560 Speaker 1: the yuro's weaker off the announcement. All right, let's get 603 00:34:35,600 --> 00:34:39,759 Speaker 1: some expert analysis of this from Brunella Rosa with Rubini Economics. 604 00:34:39,960 --> 00:34:44,400 Speaker 1: Brunella Mario dragging today had a number of alternatives he 605 00:34:44,440 --> 00:34:48,320 Speaker 1: could have chosen to stimulate growth in the euro Zone. 606 00:34:48,440 --> 00:34:53,879 Speaker 1: He chose all of them. Basically, yes, effectively a when 607 00:34:54,040 --> 00:34:58,200 Speaker 1: the full Monty almost in the sense that he has 608 00:34:58,360 --> 00:35:03,480 Speaker 1: lowered all day um policy rates that they had UH 609 00:35:04,120 --> 00:35:09,000 Speaker 1: is disposal. Of course, most notably the deep rate by 610 00:35:09,040 --> 00:35:11,759 Speaker 1: ten basis point, but also the m R O by 611 00:35:11,760 --> 00:35:14,400 Speaker 1: five basis point are can be important for the pricing 612 00:35:14,480 --> 00:35:17,640 Speaker 1: of the new t L t ros. Now we need 613 00:35:17,680 --> 00:35:22,880 Speaker 1: to see what these new t L t ros are about. 614 00:35:23,000 --> 00:35:27,960 Speaker 1: If there's any a difference with the previous one that 615 00:35:28,040 --> 00:35:31,839 Speaker 1: were launched in June twenty fourteen, Probably the pricing, as 616 00:35:31,840 --> 00:35:33,440 Speaker 1: I was saying, is going to be lower due to 617 00:35:33,480 --> 00:35:38,640 Speaker 1: the law the lower mr O eight. The big surprice, 618 00:35:38,680 --> 00:35:42,080 Speaker 1: if you want, is the increasing the size of que 619 00:35:42,520 --> 00:35:46,960 Speaker 1: from sixty up to immediately eighty billions a month. UH 620 00:35:47,120 --> 00:35:51,040 Speaker 1: A seventy billion expansion would have been more likely, but 621 00:35:51,360 --> 00:35:55,320 Speaker 1: clearly they didn't want to disappoint the market at this stage. 622 00:35:56,080 --> 00:35:58,600 Speaker 1: Like jumping with Bruno as well. I want to say 623 00:35:58,640 --> 00:36:02,279 Speaker 1: markets on the move futures fload called asset friendly up 624 00:36:02,320 --> 00:36:05,680 Speaker 1: fifteen town futures of one oh six to seventeen thousand, 625 00:36:06,200 --> 00:36:08,480 Speaker 1: twenty the German two years I just put that out 626 00:36:08,880 --> 00:36:11,120 Speaker 1: and Bloomberg Radio plus it's a five point make it 627 00:36:11,160 --> 00:36:14,279 Speaker 1: a six percent move. I see no end yet to 628 00:36:14,480 --> 00:36:18,040 Speaker 1: the surge in German two year yields some negative zero 629 00:36:18,120 --> 00:36:21,879 Speaker 1: point five six all the way up through negative zero 630 00:36:22,000 --> 00:36:24,960 Speaker 1: point five one. Mike, that bear's close watching. Why do 631 00:36:25,000 --> 00:36:27,080 Speaker 1: you suppose that is? But no, we would have thought 632 00:36:27,080 --> 00:36:32,080 Speaker 1: it would go the other way. Well, we need to 633 00:36:32,080 --> 00:36:35,440 Speaker 1: see what the positioning was. But if you want to 634 00:36:35,480 --> 00:36:40,319 Speaker 1: find perhaps the more fundamental explanation, if people think that 635 00:36:40,360 --> 00:36:43,520 Speaker 1: this is a fully reflection that removed in reality, you 636 00:36:43,560 --> 00:36:49,040 Speaker 1: should see um rate to go eventually up. Perhaps the 637 00:36:49,120 --> 00:36:52,960 Speaker 1: two years a bit uh short maturity to see those 638 00:36:53,040 --> 00:36:57,040 Speaker 1: kind of movements, but there's the chance that people see 639 00:36:57,080 --> 00:37:00,359 Speaker 1: this is eventually something that the market could work quick 640 00:37:00,440 --> 00:37:03,520 Speaker 1: in terms of eventually get de declation. Mike Jamie mcgever 641 00:37:03,640 --> 00:37:06,319 Speaker 1: over writers just puts out on Twitter or photograph of 642 00:37:06,360 --> 00:37:10,120 Speaker 1: a kitchen sink, and that about sums it up. Well. 643 00:37:10,120 --> 00:37:12,920 Speaker 1: The one thing I may have missed it because there 644 00:37:13,000 --> 00:37:15,840 Speaker 1: is so much out of the ECB this morning brittle, 645 00:37:15,920 --> 00:37:18,759 Speaker 1: But they didn't seem to change the basis on which 646 00:37:18,840 --> 00:37:23,359 Speaker 1: they make their buying decisions a capital key. So they 647 00:37:23,400 --> 00:37:27,320 Speaker 1: seem to have addressed that by allowing the central banks 648 00:37:27,360 --> 00:37:34,400 Speaker 1: to buy the corporate bonds. Yes, I mean the expansion 649 00:37:34,440 --> 00:37:38,719 Speaker 1: of eligible assets already happened in December last year when 650 00:37:38,760 --> 00:37:45,920 Speaker 1: they expanded to a local, regional and municipal bonds. Clearly 651 00:37:46,280 --> 00:37:49,719 Speaker 1: actually wanted to expand further the pace of US purchases 652 00:37:49,840 --> 00:37:52,360 Speaker 1: and and from six to twity is a big expansion. 653 00:37:52,400 --> 00:37:55,000 Speaker 1: They needed to find nuances to buy in order to 654 00:37:55,040 --> 00:37:59,960 Speaker 1: reduce discustity effect that was already affecting UM A Bundy 655 00:38:00,000 --> 00:38:03,200 Speaker 1: else And by the way, this reduction of discussing effect 656 00:38:03,320 --> 00:38:07,160 Speaker 1: might be also behind the rise in UH some of 657 00:38:07,200 --> 00:38:10,040 Speaker 1: the bulliers that we were discussing before the shots in 658 00:38:10,120 --> 00:38:14,759 Speaker 1: that case. So I think that there's also an explanation 659 00:38:14,880 --> 00:38:17,440 Speaker 1: for what's going on in the market now. This is 660 00:38:17,520 --> 00:38:22,600 Speaker 1: que tout whatever it is. Is there any more ammunition 661 00:38:23,280 --> 00:38:26,759 Speaker 1: other than the simplicity of just lower rates? How is 662 00:38:26,760 --> 00:38:33,080 Speaker 1: the toolbox set for Mr Druggy going forward? So they 663 00:38:33,080 --> 00:38:35,799 Speaker 1: are probably already reaching the limits of what they can 664 00:38:35,840 --> 00:38:42,279 Speaker 1: do UM given the current tool kit UM, because you know, 665 00:38:42,320 --> 00:38:44,880 Speaker 1: in terms of deperate they might and they might go 666 00:38:45,080 --> 00:38:48,359 Speaker 1: perhaps a minus fifty basis point, perhaps lightly lower by 667 00:38:48,360 --> 00:38:54,000 Speaker 1: introducing a tow tier preserve system UM on them on 668 00:38:54,040 --> 00:38:58,520 Speaker 1: the que side. Uh, they cannot expand and definitely so will. 669 00:38:58,560 --> 00:39:01,040 Speaker 1: They would need something new to buy. And this new 670 00:39:01,120 --> 00:39:05,120 Speaker 1: thing is probably something that is not available yet, and 671 00:39:05,160 --> 00:39:08,080 Speaker 1: it's what you might call eurobon right, something that is 672 00:39:08,120 --> 00:39:11,279 Speaker 1: creative by some form of this comunion that needs to 673 00:39:11,400 --> 00:39:14,400 Speaker 1: happen in the euro Zone. But as we all know, 674 00:39:14,560 --> 00:39:17,560 Speaker 1: in order for that to happen, you probably need another 675 00:39:17,640 --> 00:39:21,319 Speaker 1: crisis first, and then there will be another quantum leap, 676 00:39:21,800 --> 00:39:24,360 Speaker 1: include the euro bones, and then they we will have 677 00:39:24,400 --> 00:39:26,799 Speaker 1: plenty of stuff to buy. But we're not there yet. 678 00:39:27,520 --> 00:39:30,760 Speaker 1: Its Uh. One of the problems the EASYP has faced 679 00:39:30,880 --> 00:39:34,239 Speaker 1: is we don't get a reaction to monetary policy in 680 00:39:34,239 --> 00:39:37,040 Speaker 1: the periphery countries that we get in the core. They 681 00:39:37,040 --> 00:39:39,920 Speaker 1: seem to be wanting to address that with the l 682 00:39:40,000 --> 00:39:43,759 Speaker 1: t r S. Four years is the term for this, 683 00:39:43,920 --> 00:39:47,719 Speaker 1: and they can borrow at a rate equal to the 684 00:39:47,800 --> 00:39:51,200 Speaker 1: deposit rate, so they can you can borrow money, and 685 00:39:51,200 --> 00:39:53,160 Speaker 1: the EASYP essentially is going to be paying you to 686 00:39:53,280 --> 00:39:57,560 Speaker 1: do it. Yes, um and and but this is something 687 00:39:57,680 --> 00:40:00,640 Speaker 1: I'm a bit concerned about because we saw happened when 688 00:40:00,680 --> 00:40:07,360 Speaker 1: the Alto and even the tantarro was um introduced. Banks 689 00:40:07,360 --> 00:40:12,120 Speaker 1: did use those uh these liquidity to going to and 690 00:40:12,280 --> 00:40:16,799 Speaker 1: buy the high yielding sovereign credit being the Italian lytps, 691 00:40:17,239 --> 00:40:20,680 Speaker 1: Spanish bonus and obigas honest and all the rest um 692 00:40:21,239 --> 00:40:25,759 Speaker 1: and uh. And instead, what we really would like to 693 00:40:25,760 --> 00:40:29,080 Speaker 1: see is this nextus between banks and sovereigns to be 694 00:40:29,120 --> 00:40:33,120 Speaker 1: broken eventually. If that happens again, I fear that we 695 00:40:33,160 --> 00:40:36,480 Speaker 1: are actually making this next is even stronger, and so 696 00:40:36,680 --> 00:40:40,080 Speaker 1: financial stability concern and actually increase is supposed to decrease. 697 00:40:40,840 --> 00:40:44,800 Speaker 1: Am I correct that the ECB will take in siemens 698 00:40:45,160 --> 00:40:49,640 Speaker 1: corporate debt. When we say corporate bonds, they're gonna bring 699 00:40:49,719 --> 00:40:54,799 Speaker 1: in total the franc and semens of Germany. So one 700 00:40:54,840 --> 00:40:57,840 Speaker 1: of the reasons why we didn't expect this to happen 701 00:40:58,239 --> 00:41:02,920 Speaker 1: or be announced foreman so to speak, because um, they 702 00:41:02,920 --> 00:41:05,960 Speaker 1: were already buying some of the corporate bonds of Quasi 703 00:41:06,040 --> 00:41:10,399 Speaker 1: solvent and so to speak via the agency program where 704 00:41:10,440 --> 00:41:15,359 Speaker 1: you had you know that right. So I really want 705 00:41:15,400 --> 00:41:17,000 Speaker 1: to see how they want to address this because as 706 00:41:17,000 --> 00:41:20,359 Speaker 1: you can understand, um, they don't want to take as 707 00:41:20,440 --> 00:41:23,200 Speaker 1: much I could rate, so they cannot be in the 708 00:41:23,239 --> 00:41:25,600 Speaker 1: high end space. They need that I like it. You 709 00:41:25,600 --> 00:41:28,080 Speaker 1: need to see more information in March sixteenth or whatever 710 00:41:28,120 --> 00:41:31,279 Speaker 1: the data is. But critically here, did Mario Draggy just 711 00:41:31,400 --> 00:41:36,680 Speaker 1: make Europe more like Japan? Yeah, we probably made another step, 712 00:41:37,239 --> 00:41:39,080 Speaker 1: and that that action, I'm not sure it's a good 713 00:41:39,120 --> 00:41:41,480 Speaker 1: thing because as we saw, if you keep on addressing 714 00:41:42,120 --> 00:41:45,160 Speaker 1: this long term issue with only with monety instruments and 715 00:41:45,280 --> 00:41:49,239 Speaker 1: nothing changes on on the physical, uh, you're not gonna 716 00:41:49,440 --> 00:41:53,960 Speaker 1: solve the problem. Can make it divorced seconds left. Uh, 717 00:41:54,120 --> 00:41:57,120 Speaker 1: we're seeing a big market reaction drug through the kitchen 718 00:41:57,120 --> 00:42:00,880 Speaker 1: sink added. Does the market reaction last or is this 719 00:42:01,080 --> 00:42:06,600 Speaker 1: just covering positions? Uh, there's a bit of both. But 720 00:42:06,719 --> 00:42:09,400 Speaker 1: you know, the package is quite significant. So the market 721 00:42:09,480 --> 00:42:12,600 Speaker 1: is probably gonna appreciate the fact that the bank has 722 00:42:12,640 --> 00:42:15,560 Speaker 1: decided to surprise on the upside this time around. And 723 00:42:15,640 --> 00:42:19,319 Speaker 1: so this reaction is probably going to last, especially under 724 00:42:19,320 --> 00:42:22,719 Speaker 1: euro dollar I, which is probably started at descent to 725 00:42:22,880 --> 00:42:24,640 Speaker 1: US party. But we don't think it's gonna go to 726 00:42:24,640 --> 00:42:29,239 Speaker 1: party anytime. So fabulous Brunella Rosa just absolutely fabulous with 727 00:42:29,360 --> 00:42:33,560 Speaker 1: Robini economics. So euro well moves towards parody one oh 728 00:42:33,680 --> 00:42:35,960 Speaker 1: nine call it one ten down and one o weight 729 00:42:36,040 --> 00:42:42,400 Speaker 1: fifty US futures surge up nineteen futures of three Mario 730 00:42:42,520 --> 00:42:46,680 Speaker 1: Draggy with every tool available well at the press conference 731 00:42:46,960 --> 00:42:48,520 Speaker 1: at eight thirty. Stay with us