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Speaker 1: This is Bloomberg Surveillance. The banks are in much better

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Speaker 1: position now than they were before the crisis, much more

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Speaker 1: capital and they're much more resilient. One of the more

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Speaker 1: important transmission mechanisms of monetary policy when rates get to

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Speaker 1: very low levels is actually through the exchange rate. But

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Speaker 1: after the People's Bank of China, the Central Bank of

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Speaker 1: China is going to do in terms of his momfit

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Speaker 1: policy will have a big impact on market Sploomberg Surveillance.

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Speaker 1: You're linked to the world of economics, finance and investment

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Speaker 1: on Bloomberg Radio. Good morning, and Michael McKee along with

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Speaker 1: Tom Keane. It is seven am on Wall Street, one

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Speaker 1: pm in Frankfurt, where in forty five minutes the European

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Speaker 1: Central Bank will announce its latest monetary policy decision. What

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Speaker 1: will Mario do? We will have the decision and you'll

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Speaker 1: hear from Senor Drag at eight thirty Wall Street time,

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Speaker 1: and all morning we'll be looking at the possibilities and

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Speaker 1: reaction here on surveillance. Ahead of the decision. European stocks

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Speaker 1: are mixed. The stock is up a tenth of eight percent,

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Speaker 1: that's less than a full point. The decks is up

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Speaker 1: twenty three points, two tents of eight percent, and the

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Speaker 1: cariporty which was negative very much of the day, even

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Speaker 1: though we had a stronger that expected French industrial production report.

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Speaker 1: Now reflecting that up a tenth of a percent five

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Speaker 1: points on the day, the foot seas off by sixteen

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Speaker 1: that's about a three tenths drop. The euro at the

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Speaker 1: moment is lower one o nine seventy four, but we

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Speaker 1: should point out, of course, it is higher than it

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Speaker 1: was on December three, when the Bank of when the

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Speaker 1: European Center Bank last met and disappointed the markets. In general,

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Speaker 1: we can say European bond curves are slightly flatter today.

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Speaker 1: The German two year at negative basis points. Here in

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Speaker 1: the US futures decidedly higher. SMP evening features up by

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Speaker 1: seven points, three tenths of a percent, down features by

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Speaker 1: two tenths. The Nasdaq EVENI features are up eleven. That

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Speaker 1: is a re tense gain for that index. The dollar

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Speaker 1: is a little bit weaker against the YenS. Some haven

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Speaker 1: flows there one thirteen sixty two the pound one forty

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Speaker 1: two oh nine. Bonds in the US are higher, yields

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Speaker 1: lower one point eight six for the ten year, five

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Speaker 1: year at one point three six, the two year head

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Speaker 1: point eight eight, And of course we should mention oil

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Speaker 1: prices because Mario Draggy has cited those as an important

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Speaker 1: factor in what the ECB does because of their influence

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Speaker 1: on inflation. Bred crude forty six is down three quarters

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Speaker 1: of a percentage point, West Texas at thirty eight nineteen

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Speaker 1: off by three tips. Well, the ECB will never say this,

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Speaker 1: but one goal of cutting rates is to weaken the euro.

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Speaker 1: How does that affect the rest of the world? Constantinos

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Speaker 1: Venetis is with Lombard Street Global Macro Research. You've been

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Speaker 1: looking at a rally in emerging markets because the currencies

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Speaker 1: that we have been far going have basically been stable,

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Speaker 1: although the U S trade weighted dollar has fallen three

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Speaker 1: percent since the ECB last met correct here, I think

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Speaker 1: we have some more of this rally. We have seen

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Speaker 1: US data at the margin improved. Chinese policy makers also

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Speaker 1: want to stimulate with other margins, so I guess you

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Speaker 1: know we have may have more of this rally. Having

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Speaker 1: said that calling a bit bottom is a bit premature stage,

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Speaker 1: I think, well, how would you describe it? Give me

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Speaker 1: an adjective or a description to to sort of set

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Speaker 1: the stage for where we are in emerging markets as

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Speaker 1: they watch this week the ECB and Baku in Japan

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Speaker 1: next week the US FED. I think that the margin

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Speaker 1: things are getting less bad. That's the key point here

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Speaker 1: is the kind of a green shoot mentality of people

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Speaker 1: are seeing this and sort of with the US and

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Speaker 1: Chinese data getting better at the trying to sort of

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Speaker 1: buy into this and cover their sorts somewhat. But I

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Speaker 1: think you know, if you look at this more structurally,

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Speaker 1: China still fragiants of p M eyes are stable but

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Speaker 1: still pointed to contraction, and Mommy is sort of tightening

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Speaker 1: overall in the MS, and I think you have this

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Speaker 1: prolonged sort of slow weakness or growth and earnings have

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Speaker 1: been weak for some time, and this at some point

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Speaker 1: contaminates batters weet sort of stock is contaminated, and I

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Speaker 1: think this will sort of begin to show in the

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Speaker 1: next few quarters. So calling the bottom here maybe be

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Speaker 1: premature for these reasons, but still we're here in the

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Speaker 1: same tone folks from Constantinos Venez that we heard from

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Speaker 1: Olivia blan Chart earlier this morning about things are modestly improving.

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Speaker 1: Bloombers surveillance this ECB morning brought you by Investco looking

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Speaker 1: for investment views experienced experts just to click away. Go

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Speaker 1: to investco dot com, slash us to subscribe to the

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Speaker 1: investco blog and follow and investco us on Twitter. Constantino's

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Speaker 1: when I when I look at the the interdependencies of

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Speaker 1: Europe and all who Mario dragging speaking to today in

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Speaker 1: the press conference, I'm always fascinated by the audiences, the

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Speaker 1: audience other finance ministers and central bankers. Is it a

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Speaker 1: one way dialogue with the Bundesbank. Is he speaking to

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Speaker 1: Eastern Europe? Who's he talking to? I think it all

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Speaker 1: of these together, But I think Mr Jodi, at some

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Speaker 1: point we like to see the fiscal side become a

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Speaker 1: bit more stimulative and a bit more proactive. Bring that

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Speaker 1: in Europe always takes time, and that's a key problem.

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Speaker 1: At the same time, you know, we've seen the Japanese

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Speaker 1: experience with magative rates haven't really brought all the things

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Speaker 1: people want them to bring in the beginning. So I guess,

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Speaker 1: you know, we are in a strange situation. He would

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Speaker 1: do whatever he takes, but I think at some point

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Speaker 1: this would have to morp into a fiscal force as well.

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Speaker 1: How does that happen, Mike, I don't see. I don't

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Speaker 1: understand the mechanism. It's like inflation East is except its

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Speaker 1: austerity Easter is almost well. That doesn't seem to be

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Speaker 1: much enthusiasm as constantinus for any kind of ciscal activity

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Speaker 1: in the Arizona anywhere else in the world right now.

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Speaker 1: Very correct, but I think inflation nevertheless will at some

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Speaker 1: points started to migrate towards core inflation in Europe, which

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Speaker 1: is about one percent, and that's the hope that basically

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Speaker 1: at the moment of course they need to push for

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Speaker 1: that and sort of be seen as actually adding to

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Speaker 1: the to these forces. But I think, you know, base

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Speaker 1: effects as well as some growth in Europe should see

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Speaker 1: headline CPI tend to the core this year. Your focus

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Speaker 1: is on e M research as well. How is trade

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Speaker 1: doing in particularly with Europe where it's such an important

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Speaker 1: part of their economic mix. Trade has been sluggish. It

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Speaker 1: has been showing signs of life, but nothing game changing.

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Speaker 1: And I think, you know, unless China, uh you know,

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Speaker 1: grows more than it does now or at least people

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Speaker 1: are less uncertain about it. Trade um sort of trade

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Speaker 1: trust uh, you will see em trade remains subdued and

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Speaker 1: prices as well as volumes are being subdued, so that

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Speaker 1: doesn't help at all. Divergence is the story everybody's talking

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Speaker 1: about right now. With the FED set to rais rates

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Speaker 1: at least sometime this year and all the focus being

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Speaker 1: on the other central banks lowering rates, how does that

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Speaker 1: affect the rest of the world or have we priced

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Speaker 1: it well? It's a good question, I think in the

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Speaker 1: MS at least you have to be looking at different

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Speaker 1: areas and different conclusions. So say, in Latin countries like Brazil,

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Speaker 1: inflation has been high. Uh, physical policy hasn't really been discipline,

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Speaker 1: so pan shuttle banks are essentially prevented from easing policy

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Speaker 1: even though you have growth in recession in most of Asia.

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Speaker 1: On the other hand, uh, in inflation is low, maybe

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Speaker 1: you have even disinflation or deflaced in some places, and

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Speaker 1: rates have been coming down. Having said that, in real terms,

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Speaker 1: if you compare these to say to the ten levels,

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Speaker 1: these are much higher than they were back then. So

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Speaker 1: the big picture here is that real rates are higher,

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Speaker 1: spreads are higher, and this means tider money conditions and

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Speaker 1: unless this turns uh, this is a there is a

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Speaker 1: not to be calling the bottom here in the ambrisk assets.

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Speaker 1: Dr Veniez, thank you so much, Constantinos Veneez with Charles

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Speaker 1: Duma Lombard Street at Research. Uh this morning, Um, we

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Speaker 1: have a very busy day calendar this morning clearly the

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Speaker 1: top moment we Michael McKee parsing out, Mike, how many

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Speaker 1: minutes into the press conference do the headlines get important?

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Speaker 1: It doesn't start right away. Doesn't know what Senor Jogie

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Speaker 1: wants to do. Uh, he will generally he'll start off

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Speaker 1: by describing what they did in terms of rates, and

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Speaker 1: we'll get that data forty five minutes earlier. So if

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Speaker 1: he just repeats that, it will matter. You don't want

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Speaker 1: to miss too much of it, because he could immediately

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Speaker 1: say in addition to rates, we're doing this exactly the

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Speaker 1: in addition to and I got much more of that

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Speaker 1: from Steve Whiting this morning with City Group. The idea

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Speaker 1: of the optionality that Mr Droggy has as he attends

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Speaker 1: the moment the euro one oh nine seventy nine futures,

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Speaker 1: it was Mike mentioned up eight, Dow futures up forty nine,

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Speaker 1: so a nice lift of the market. Uh, they are

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Speaker 1: oil against churning the entire Bloomberg terminal. I'm gonna go

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Speaker 1: back four days, if not six days. Has been a

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Speaker 1: churn up down, up down, and even minute by many

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Speaker 1: eields are infractionally. I don't want to make too much

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Speaker 1: of it. On the tenure, We'll watch German two year

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Speaker 1: is a headline to headline litmus paper UH for the

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Speaker 1: Druggy press conference negative point five five four to three

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Speaker 1: digits in point zero one four h points negative point

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Speaker 1: five five four and the German two year as well.

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Speaker 1: Bloomer Surveillance. This morning, we brought you by National Reality.

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Speaker 1: Returns on cash and rented real estate find them find

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Speaker 1: National Reality and and r I a dot net, and

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Speaker 1: r I a dot net. Mike, what's the what's the

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Speaker 1: greatest likelihood that we're gonna get out of Mr D

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Speaker 1: The forecast consensus is for a ten basis point cut

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Speaker 1: in the deposit rate to negative forty Uh. Then we'll

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Speaker 1: see if he adds any que. There's a feeling he

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Speaker 1: may accelerate the purchase of bonds across the Europe accelerate

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Speaker 1: beautifully explained, uh. Bloomer Surveillance on economics, finance, investment, and

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Speaker 1: international relations. Certainly it is an international moment from Mario

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Speaker 1: drag Oil thirty four The Barrel Time down to check

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Speaker 1: with bar I get the latest world in national headlines, Michael, Mike, Tom,

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Speaker 1: thank you very much. Republican Party Chairman Ryan's Previo says

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Speaker 1: he wants today's Republican presidential debate to be more of

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Speaker 1: a g rated event than recent showdowns. The four remaining

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Speaker 1: candidates will hold their latest debate tonight at the University

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Speaker 1: of Miami. Democratic presidential candidates Hillary Clinton and Bernie Sanders

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Speaker 1: debated immigration and other issues last night in Florida. Clinton

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Speaker 1: faulted Sanders were repeatedly voting against the two thousand seven

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Speaker 1: Comprehensive Immigration Reform Bill. Sanders faulted Clinton for opposing a

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Speaker 1: two thousand seven efforts to let people who were in

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Speaker 1: the country illegally obtain driver's licenses. Canadian Preme Minister Justin

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Speaker 1: Trudeau will pay a visit to the White House today.

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Speaker 1: President Barack Obama will give trudeaua state dinner, the first

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Speaker 1: for Canada since nineteen Later today, President Obama and Joe

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Speaker 1: will talk about the environment. Global News twenty four hours

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Speaker 1: a day, powered by our two hundred journalists and more

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Speaker 1: than a hundred fifty news bureaus from around the world.

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Speaker 1: I'm Mike Labar time. Michael, thank you so much. Coming

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Speaker 1: up the conversation of the day for global banking Jeff

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Speaker 1: Staley of Barclays. This is Bloomberg Surveillance. Bloomberg Surveillance is

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