1 00:00:02,480 --> 00:00:06,360 Speaker 1: Global business news twenty four hours a day, Bloomberg dot Com, 2 00:00:06,559 --> 00:00:09,280 Speaker 1: the Radio plus Mobile Act and on your radio, this 3 00:00:09,800 --> 00:00:13,239 Speaker 1: is a Bloomberg Business Flash and I'm Karen Moscow. This 4 00:00:13,360 --> 00:00:17,320 Speaker 1: updates brought to you by American Arbitration Association. International Trade 5 00:00:17,400 --> 00:00:20,599 Speaker 1: or business Dispute Resolve Faster with the International Center for 6 00:00:20,680 --> 00:00:24,759 Speaker 1: Dispute Resolution, the leader in alternative dispute resolution around the world. 7 00:00:25,079 --> 00:00:28,560 Speaker 1: I see d R dot org. U S docks are 8 00:00:28,640 --> 00:00:32,480 Speaker 1: higher amid expanded stimulus measures from the European Central Bank. 9 00:00:32,520 --> 00:00:34,720 Speaker 1: It was tempered by concern the moves may not be 10 00:00:34,840 --> 00:00:37,000 Speaker 1: enough to counter a dim growth outlook for the region. 11 00:00:37,240 --> 00:00:39,519 Speaker 1: We do check the markets every fifteen minutes throughout the 12 00:00:39,560 --> 00:00:42,280 Speaker 1: trading day on Bloomberg and the SNP five hundred is 13 00:00:42,360 --> 00:00:45,120 Speaker 1: up three tens per center five points to nineteen ninety 14 00:00:45,159 --> 00:00:48,000 Speaker 1: four Dow Jones Industrial average of a quarter percent or 15 00:00:48,040 --> 00:00:50,920 Speaker 1: forty three points to seventeen thousand, forty three, and then 16 00:00:50,960 --> 00:00:53,520 Speaker 1: astacts of four ten percent or eighteen points to forty 17 00:00:53,600 --> 00:00:56,600 Speaker 1: six nine two ten. Your treasuries up one thirty seconds, 18 00:00:56,640 --> 00:00:58,680 Speaker 1: the yield one point eight seven per cent to yield 19 00:00:58,720 --> 00:01:01,440 Speaker 1: on the two year point nine zero row percent NIMAX 20 00:01:01,480 --> 00:01:03,720 Speaker 1: screwed oil down two point three percent or eighty eight 21 00:01:03,760 --> 00:01:06,840 Speaker 1: cents at thirty seven forty three of arrol Comax Gold 22 00:01:06,880 --> 00:01:09,080 Speaker 1: is up six tents percent or eight dollars ten cents 23 00:01:09,080 --> 00:01:12,200 Speaker 1: at twelve sixty forty announced the euro and dollar ten 24 00:01:12,319 --> 00:01:15,840 Speaker 1: forty one the yen one thirteen point seven to. Filings 25 00:01:15,840 --> 00:01:18,560 Speaker 1: for US unemployment benefits fell last week to the lowest 26 00:01:18,640 --> 00:01:21,920 Speaker 1: level in five months. Jobless claims dropped by eighteen thousand 27 00:01:22,120 --> 00:01:24,520 Speaker 1: to two hundred fifty nine thousand. In the week ending 28 00:01:24,560 --> 00:01:28,200 Speaker 1: March five. Yahoo filled out its board, adding two independent 29 00:01:28,240 --> 00:01:30,920 Speaker 1: directors at a time with the once dominant internet company 30 00:01:31,000 --> 00:01:34,840 Speaker 1: is facing major strategic decisions and pressure from a shareholders 31 00:01:34,880 --> 00:01:37,520 Speaker 1: about how to salvage itself. Yah who shares down one 32 00:01:37,520 --> 00:01:40,720 Speaker 1: point six percent today and that's a Bloomberg business flash, 33 00:01:40,760 --> 00:01:44,319 Speaker 1: Tom and Mike Karen Moscow, thank you very much. Well, 34 00:01:44,360 --> 00:01:47,559 Speaker 1: here's where we are. The European Central Bank, it's throwing 35 00:01:47,560 --> 00:01:50,520 Speaker 1: the kitchen sink at the European economy, cutting all three 36 00:01:50,720 --> 00:01:54,480 Speaker 1: of their interest rates, including the deposit rate to negative 37 00:01:54,480 --> 00:01:59,280 Speaker 1: forty basis points. The increased que by twenty billion euros 38 00:01:59,440 --> 00:02:02,920 Speaker 1: a month. They're introducing a new loan program essentially allowing 39 00:02:02,960 --> 00:02:06,160 Speaker 1: banks to borrow at almost no cost, or possibly I 40 00:02:06,160 --> 00:02:09,280 Speaker 1: would have the ECB paid them to borrow for four years, 41 00:02:09,680 --> 00:02:11,880 Speaker 1: not much more Mario drug he could have done. And 42 00:02:11,960 --> 00:02:15,639 Speaker 1: what has happened to the euro? It has gotten stronger now. 43 00:02:15,760 --> 00:02:21,320 Speaker 1: One t get Jukes is in charge of following the 44 00:02:21,400 --> 00:02:25,400 Speaker 1: moves in the markets for Associated General and he is 45 00:02:25,480 --> 00:02:28,400 Speaker 1: with us now. Kit for those of us not in 46 00:02:28,440 --> 00:02:30,359 Speaker 1: the markets, a bit of a head scratcher. The market 47 00:02:30,400 --> 00:02:33,120 Speaker 1: reaction a lot of people noting that Drugg He said, 48 00:02:33,639 --> 00:02:36,680 Speaker 1: we have done an enormous amount and maybe we won't 49 00:02:36,680 --> 00:02:38,720 Speaker 1: have to do more, and that's enough to turn the 50 00:02:38,720 --> 00:02:43,160 Speaker 1: markets around. Yeah, at least the initial reaction sense of 51 00:02:43,200 --> 00:02:45,000 Speaker 1: the market was he's trying the kitchen sink at it, 52 00:02:45,040 --> 00:02:47,000 Speaker 1: but he hasn't got another. Think there's no sinks in 53 00:02:47,040 --> 00:02:50,880 Speaker 1: any other room in the house. Um. And so we 54 00:02:51,080 --> 00:02:54,000 Speaker 1: took the euro, I guess one and a half sent lower, 55 00:02:54,280 --> 00:02:57,600 Speaker 1: and we held onto that for a bit and now 56 00:02:57,720 --> 00:03:00,440 Speaker 1: now we've spent back um and I think that will 57 00:03:00,520 --> 00:03:04,160 Speaker 1: and easy to in a sense, if this is the 58 00:03:04,160 --> 00:03:05,720 Speaker 1: limit of where they can cut rates, too, it's going 59 00:03:05,760 --> 00:03:07,840 Speaker 1: to be hard for them to do much more on 60 00:03:07,880 --> 00:03:10,160 Speaker 1: their own but the series of moves that they did 61 00:03:10,280 --> 00:03:13,839 Speaker 1: look on the surface, probably better for risk sentiment, better 62 00:03:13,840 --> 00:03:16,200 Speaker 1: for equity markets. They might be better for the S 63 00:03:16,240 --> 00:03:17,920 Speaker 1: and P than they are for the Euro. At this 64 00:03:17,960 --> 00:03:20,320 Speaker 1: point in time, they are going to put more money in. 65 00:03:20,720 --> 00:03:22,640 Speaker 1: We are having the prospect and angled in front of 66 00:03:22,680 --> 00:03:25,600 Speaker 1: us of them buying continuing to buy a wider range 67 00:03:25,639 --> 00:03:27,440 Speaker 1: of assets if they need to do more of that 68 00:03:27,840 --> 00:03:31,639 Speaker 1: over time. But what really took the euro down from 69 00:03:31,720 --> 00:03:33,760 Speaker 1: the one twenties down to down to this level a 70 00:03:33,840 --> 00:03:37,600 Speaker 1: year ago was the move to negative rates. And while 71 00:03:37,640 --> 00:03:42,000 Speaker 1: I think cutting rates further can help, they know they didn't. 72 00:03:42,000 --> 00:03:44,760 Speaker 1: They only cut them ten basis points, and the hint 73 00:03:44,840 --> 00:03:49,120 Speaker 1: that maybe they're done on that has definitely paused the market. 74 00:03:49,240 --> 00:03:51,600 Speaker 1: So um, if you're an it goes lower from here. 75 00:03:51,600 --> 00:03:54,360 Speaker 1: It's going to go lower because the yield differential between 76 00:03:54,400 --> 00:03:58,560 Speaker 1: the United States and Germany in particular will probably widen further, 77 00:03:58,680 --> 00:04:02,320 Speaker 1: and that will put money from what's treasuries and little 78 00:04:02,320 --> 00:04:04,240 Speaker 1: wide and FODI will do we'll do more if if 79 00:04:04,240 --> 00:04:06,640 Speaker 1: the Fed looks like raising rates in June, is say, 80 00:04:06,760 --> 00:04:09,720 Speaker 1: but but it's gonna be pretty good. We have to 81 00:04:09,800 --> 00:04:14,640 Speaker 1: regroup from this, and part of regroup is expectations he 82 00:04:14,760 --> 00:04:18,200 Speaker 1: will manage them. All. Central banks will react to what 83 00:04:18,360 --> 00:04:21,960 Speaker 1: Mr drog has done today. But the only expectation I 84 00:04:22,040 --> 00:04:24,560 Speaker 1: got is QUI one, QUI two? And on and on 85 00:04:24,640 --> 00:04:31,919 Speaker 1: and on. Why will QUI ever end? Um A good question? 86 00:04:32,760 --> 00:04:34,920 Speaker 1: I mean, I think QUI? You know, I think QUI 87 00:04:35,040 --> 00:04:37,640 Speaker 1: either either does something it hasn't done yet. But which 88 00:04:37,720 --> 00:04:39,400 Speaker 1: is you know, Qui? So far as we can see 89 00:04:40,200 --> 00:04:42,200 Speaker 1: your side of the Atlantic, my side in Atlantic has 90 00:04:42,200 --> 00:04:44,400 Speaker 1: done quite a lot to boost acid prices and very 91 00:04:44,480 --> 00:04:48,360 Speaker 1: little to boost aggregate demand and to get growth happening. 92 00:04:48,360 --> 00:04:50,200 Speaker 1: Now central bankers will say, we don't know what what 93 00:04:50,200 --> 00:04:52,440 Speaker 1: would have happened if they hadn't done it. But you know, 94 00:04:52,480 --> 00:04:55,000 Speaker 1: at some point, either we get some growth and we 95 00:04:55,040 --> 00:04:58,080 Speaker 1: feel less need or we turn around and we say, okay, 96 00:04:58,600 --> 00:05:01,840 Speaker 1: we we need Plan B and we haven't gotten that far. 97 00:05:01,880 --> 00:05:04,919 Speaker 1: I mean, and I think that is to my concern 98 00:05:05,080 --> 00:05:08,039 Speaker 1: is you know, if this is a law of diminishing 99 00:05:08,520 --> 00:05:13,479 Speaker 1: returns from buying more and more assets, Um, it's it's 100 00:05:13,520 --> 00:05:15,800 Speaker 1: not obviously, it's not obvious. Well, the reason for it 101 00:05:15,960 --> 00:05:18,400 Speaker 1: ending is what's the point going on? Buy more and more? 102 00:05:18,880 --> 00:05:21,560 Speaker 1: It puts more and more distortions into the global economy 103 00:05:22,560 --> 00:05:24,760 Speaker 1: enough already that that would be the argument against it. 104 00:05:25,279 --> 00:05:28,080 Speaker 1: I would rather they had cut rates more into negative 105 00:05:28,160 --> 00:05:31,880 Speaker 1: territory and not bought more assets today, it's my opinion. 106 00:05:32,200 --> 00:05:35,720 Speaker 1: They seem to feel that that would be difficult. Then 107 00:05:35,760 --> 00:05:40,320 Speaker 1: it would have an impact on banks. It must do 108 00:05:40,360 --> 00:05:43,039 Speaker 1: at some point, because if the banks don't pass negative 109 00:05:43,120 --> 00:05:46,520 Speaker 1: rates on down the line, and you know, um imagine, 110 00:05:46,640 --> 00:05:49,720 Speaker 1: imagine you're checking account in your bank in New York, 111 00:05:50,680 --> 00:05:54,279 Speaker 1: costing you money every every month, and how unhappy would 112 00:05:54,279 --> 00:05:56,359 Speaker 1: you be. You can imagine that the first bank that 113 00:05:56,440 --> 00:06:00,920 Speaker 1: does that and most negative rates US was pretty unpopular 114 00:06:00,960 --> 00:06:02,680 Speaker 1: and they might they might lose that, so no one 115 00:06:02,680 --> 00:06:05,520 Speaker 1: wants to do it. So negative rates are attacks on 116 00:06:05,560 --> 00:06:07,640 Speaker 1: the banking system at the same time as you're trying 117 00:06:07,680 --> 00:06:10,280 Speaker 1: to get a benefit in terms of sale WEEKI currency. 118 00:06:10,400 --> 00:06:13,320 Speaker 1: So yeah, that that you know, and it's not going 119 00:06:13,360 --> 00:06:16,400 Speaker 1: to be popular with the German banking industry. Say if 120 00:06:16,440 --> 00:06:17,920 Speaker 1: you do it, if you do it from the ECB 121 00:06:18,160 --> 00:06:21,520 Speaker 1: so that there are limits us I'm not sure they're 122 00:06:21,560 --> 00:06:23,680 Speaker 1: quite there yet, but but that that's what you know. 123 00:06:23,839 --> 00:06:26,000 Speaker 1: I think that's what we make within the EB was about. 124 00:06:26,080 --> 00:06:27,680 Speaker 1: But that's what we like to have you on is 125 00:06:27,680 --> 00:06:30,839 Speaker 1: the idea of limits. I mean, if it's calculus and 126 00:06:30,880 --> 00:06:36,279 Speaker 1: we're limiting out to some point, did Mr Draggy identify 127 00:06:36,400 --> 00:06:40,719 Speaker 1: the vector the glide path where we hit that astant? 128 00:06:41,040 --> 00:06:44,719 Speaker 1: I mean I do, I just don't see it. I 129 00:06:44,760 --> 00:06:46,720 Speaker 1: think he's telling us that, you know, in a sense 130 00:06:46,720 --> 00:06:48,040 Speaker 1: that I would have said that he would have had 131 00:06:48,080 --> 00:06:50,560 Speaker 1: more impact if he had more negative rates, but he 132 00:06:50,560 --> 00:06:53,360 Speaker 1: couldn't get rates further. So he's doing more considative easying, 133 00:06:53,480 --> 00:06:56,799 Speaker 1: and effectively he's doing the easier thing to do because 134 00:06:56,839 --> 00:07:01,039 Speaker 1: he feels, you know, within within the europe In Central 135 00:07:01,040 --> 00:07:04,240 Speaker 1: Banks governing Council, that he's not got the support for 136 00:07:04,279 --> 00:07:06,680 Speaker 1: putting the pain onto the banking sector. And you know, 137 00:07:06,920 --> 00:07:09,720 Speaker 1: I mean there's a there's a big line where once 138 00:07:09,880 --> 00:07:12,200 Speaker 1: once banks start passing negative rates onto you and me. 139 00:07:12,720 --> 00:07:14,800 Speaker 1: I suspect once one does, everybody else will do and 140 00:07:14,800 --> 00:07:16,640 Speaker 1: will grumble. But I'm not sure what else will happen, 141 00:07:16,680 --> 00:07:18,400 Speaker 1: And then they'll find they have more ammunition. But so 142 00:07:18,480 --> 00:07:21,160 Speaker 1: now I think they really do think they are pretty 143 00:07:21,240 --> 00:07:23,360 Speaker 1: much out of ammunition. I think that's that's the problem. 144 00:07:23,360 --> 00:07:27,240 Speaker 1: And we'll come back from the currency market and say Unfortunately, 145 00:07:27,280 --> 00:07:29,680 Speaker 1: to get the euro significantly weaker, you need the US 146 00:07:29,760 --> 00:07:32,400 Speaker 1: to do most of the heavy lifting. It's it's how 147 00:07:32,440 --> 00:07:34,320 Speaker 1: many times since the fed rates rates will be the 148 00:07:34,320 --> 00:07:38,080 Speaker 1: big driver here and he's he's limited on that. And equally, 149 00:07:38,160 --> 00:07:40,560 Speaker 1: you know, if you send equity indusseries higher on the 150 00:07:40,600 --> 00:07:43,680 Speaker 1: back of this buying because you've got an expectation of 151 00:07:43,680 --> 00:07:47,080 Speaker 1: lower rates for even longer, that that makes them more volatile, 152 00:07:47,200 --> 00:07:50,080 Speaker 1: because they're more vulnerable. If everybody, if anybody ever talks 153 00:07:50,120 --> 00:07:53,760 Speaker 1: about this, this game ending, the game of musical chairs, 154 00:07:53,800 --> 00:07:57,200 Speaker 1: because you know that the equity market is so disconnected 155 00:07:57,240 --> 00:07:59,840 Speaker 1: from the from the earning stream of the companies. So 156 00:08:00,640 --> 00:08:03,520 Speaker 1: we are we're running out of room. We're very close 157 00:08:03,560 --> 00:08:07,000 Speaker 1: to it now as that sinks in, Is this what 158 00:08:07,040 --> 00:08:09,920 Speaker 1: we're going to see with the markets, the reaction that 159 00:08:09,960 --> 00:08:12,440 Speaker 1: we've seen in the year old the flattening in the 160 00:08:12,480 --> 00:08:16,080 Speaker 1: European yield curves. I think we'll continue to flatten the 161 00:08:16,120 --> 00:08:17,480 Speaker 1: key Yelk curve as we say, all right, if we 162 00:08:17,520 --> 00:08:19,400 Speaker 1: can't do much more when we've not got you know, 163 00:08:19,440 --> 00:08:22,840 Speaker 1: we've still got not enough credit growth and GDP growth 164 00:08:22,840 --> 00:08:24,680 Speaker 1: of just over one and a half per cent at 165 00:08:24,720 --> 00:08:27,440 Speaker 1: the moment that people are gonna look forward and say, Okay, 166 00:08:27,800 --> 00:08:29,600 Speaker 1: I need to buy more duration, I need to buy 167 00:08:29,600 --> 00:08:32,040 Speaker 1: more coper bonds. I think you'll get You'll get money 168 00:08:32,040 --> 00:08:37,200 Speaker 1: pushing out into riskier assets looking for yield um and yes, 169 00:08:37,240 --> 00:08:39,360 Speaker 1: and the whole thing, the whole thing could could you know, 170 00:08:39,480 --> 00:08:42,360 Speaker 1: sort of drift down and we may get more volatility 171 00:08:42,400 --> 00:08:47,040 Speaker 1: and equity markets and unless of Olive County and bond markets. 172 00:08:47,360 --> 00:08:50,560 Speaker 1: Here's a here's a headline that came out at three am. 173 00:08:50,679 --> 00:08:54,719 Speaker 1: This was made for Kit Jukes ECBC euro at one 174 00:08:54,800 --> 00:08:59,920 Speaker 1: eleven this year, one twelve next year and one twelve, 175 00:09:00,160 --> 00:09:03,679 Speaker 1: two eighteen. Kid. If you made that prediction of sock jen, 176 00:09:03,760 --> 00:09:10,240 Speaker 1: you'd be out of a job. What is what was 177 00:09:10,280 --> 00:09:13,520 Speaker 1: going to happen? What is wise? When? What do you 178 00:09:13,640 --> 00:09:16,000 Speaker 1: call on Europe? Can you make some news? You're going 179 00:09:16,040 --> 00:09:20,400 Speaker 1: to amend your call this morning? Um? I think will? 180 00:09:20,520 --> 00:09:23,240 Speaker 1: I think we will. We will get to a point 181 00:09:23,240 --> 00:09:25,280 Speaker 1: where the beneficiary of this is probably going to be 182 00:09:25,280 --> 00:09:28,240 Speaker 1: the SMP that will have a knock on effect to 183 00:09:28,520 --> 00:09:31,280 Speaker 1: the timing of the next federate hike and expectations of it. 184 00:09:31,360 --> 00:09:33,080 Speaker 1: And I will get the euro down to one oh 185 00:09:33,080 --> 00:09:35,079 Speaker 1: five round about the back end of this year, but 186 00:09:35,120 --> 00:09:37,559 Speaker 1: it's going to be quite slow. I'm gonna find other 187 00:09:37,679 --> 00:09:42,360 Speaker 1: currencies more interesting. Kit Chukes, thanks so much for joining us. 188 00:09:42,440 --> 00:09:46,679 Speaker 1: Historic quite amazing. I have to say, of all the 189 00:09:46,800 --> 00:09:50,600 Speaker 1: observations anybody has made today, the best came in a 190 00:09:50,640 --> 00:09:55,560 Speaker 1: tweet from Alberto Gallo. Very good that Mario Dragging was 191 00:09:55,600 --> 00:09:59,000 Speaker 1: wearing the exact same tie today as he wore on 192 00:09:59,040 --> 00:10:02,000 Speaker 1: the day he the whatever. It takes a couple of 193 00:10:02,120 --> 00:10:04,600 Speaker 1: years ago, so take it from that what you will. 194 00:10:05,040 --> 00:10:08,559 Speaker 1: The market up eight advance is seventeen thousand, one hundred 195 00:10:08,640 --> 00:10:12,000 Speaker 1: on the Dow SP five hundred over two thousand, two 196 00:10:12,000 --> 00:10:17,319 Speaker 1: thousand three punch bowl full. Equities rise and with it 197 00:10:17,480 --> 00:10:22,080 Speaker 1: risk on yields. After a tumultuous, indeed historic morning, the 198 00:10:22,120 --> 00:10:26,240 Speaker 1: tenure yield one two year now making a dash for 199 00:10:26,320 --> 00:10:29,280 Speaker 1: one percent, we blow it out to point nine three 200 00:10:29,679 --> 00:10:34,240 Speaker 1: on the two year curve, flattening in the US to 201 00:10:34,280 --> 00:10:37,760 Speaker 1: show how odd things are. Oil cell thirty seven seventy 202 00:10:37,760 --> 00:10:39,199 Speaker 1: on nine Max. Don't want to make a big deal 203 00:10:39,200 --> 00:10:41,840 Speaker 1: about that. Gold up six dollars a year O one 204 00:10:42,600 --> 00:10:48,199 Speaker 1: six up all seven pips after being much weaker earlier. 205 00:10:48,240 --> 00:10:51,200 Speaker 1: We need to give a major shout out to our 206 00:10:51,240 --> 00:10:56,080 Speaker 1: European Economic Government team for providing us with assistance today, 207 00:10:56,080 --> 00:11:00,280 Speaker 1: particularly with the news flow out of frontfort chair Many. 208 00:11:00,280 --> 00:11:03,520 Speaker 1: We are produced by y U E. N Our. Global 209 00:11:03,559 --> 00:11:08,200 Speaker 1: technical director is Kenneth fail You. Stay tuned to Bloomberg 210 00:11:08,280 --> 00:11:11,520 Speaker 1: Radio for much more on this historic ECB action. It's 211 00:11:11,520 --> 00:11:12,679 Speaker 1: Bloomberg Surveillance.