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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: This is a Bloomberg Business Flash and I'm Karen moscount

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Speaker 1: is updates brought to you by Interactive Brokers and c

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Speaker 1: M Group. If you're looking for a global futures contracts

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Speaker 1: slash c M E Group US At index Futures, they're higher,

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Speaker 1: signaling more games for equities heading into the eighth year

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Speaker 1: of a bull run as investors away queues from central banks.

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Speaker 1: We checked the markets every fifteen minutes throughout the trading

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Speaker 1: day on Bloomberg snp Emity futures up a body points

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Speaker 1: down e Many futures up sixty nine NAS doc e

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Speaker 1: Many futures of fifteen. The docks in Germany's up one

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Speaker 1: point two percent ten, Your treasury down thirteen thirty seconds,

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Speaker 1: the yield one point eight seven percent to yield on

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Speaker 1: the two year point eight nine percent. NIMEX screwed oil

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Speaker 1: up two percent, or seventy three cents to thirty seven

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Speaker 1: twenty three of arrol Comex gold is down one point

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Speaker 1: two per cent or fifteen dollars fifty cents the euro

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Speaker 1: at dollar nine five zero, the N one twelve eight one,

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Speaker 1: and that's a Bloomberg business flash. Tom and Mike Carabosco,

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Speaker 1: thank you very much. Well, as Tom mentioned, the ECB

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Speaker 1: means tomorrow, Mario dragging a range of options. You heard

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Speaker 1: Lena kamal Evan saying a few moments ago that she

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Speaker 1: thinks helicopter money maybe the answer. Ben Emmons from Leader

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Speaker 1: Cappell is going to have to trade whatever Mr Draggy does,

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Speaker 1: So let's bring him in and get the market's view

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Speaker 1: of what's likely to happen and what the impact is

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Speaker 1: going to be. Uh, Ben, what do you think Mario

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Speaker 1: Draggy does and would it be the same thing as

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Speaker 1: something that will have an impact on the markets and

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Speaker 1: uh and help out the euro Zone? A right, good morning,

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Speaker 1: Mike and Tom takes thanks having me Um. Well, I

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Speaker 1: think if you look back at the history of what

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Speaker 1: the CP has done so far and what there's there's

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Speaker 1: two things to stay english. They're right. One, he is

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Speaker 1: very good at signaling what what is going to do next,

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Speaker 1: and markets are anticipating and I did a little little

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Speaker 1: quick study on that and sort like, yeah, the market

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Speaker 1: rallies ahead of this potential announcement, but then the announcement

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Speaker 1: itself is welcome relatively muted, and you can see this

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Speaker 1: in interest rate and start prices and bourge etcetera. If

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Speaker 1: you look at the history changes that the note that

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Speaker 1: send you shows that shows that table um. So I

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Speaker 1: think tomorrow you have again this sort of response where

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Speaker 1: largely market expectations are set at that que will expand

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Speaker 1: and that they will introduce a negative to positive rates

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Speaker 1: and then they will look at the details of maybe

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Speaker 1: there's there's tweaks here and there that may lead to

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Speaker 1: to surprise. But I think the background here is Mike

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Speaker 1: is that dragging has to always get some form of

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Speaker 1: compromise among his ECB members for this next policy action.

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Speaker 1: And that means that he is really good at signaling

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Speaker 1: you know, a potential new action coming and then as

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Speaker 1: the market response to that, he can then create this

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Speaker 1: sort of environments. Look, it works, So therefore let's create

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Speaker 1: have a compromise about what we're gonna do, because there's

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Speaker 1: going to be resistance by some BCD members of having

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Speaker 1: much more QUI and otis who would argue for for

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Speaker 1: for less qv etcetera. So is that element as well.

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Speaker 1: So I think you're having a tomorrow and effect where

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Speaker 1: interestvates are probably going to be developed if we newted.

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Speaker 1: I think what I want to watch tomorrow e is

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Speaker 1: how credit marks are going to respond exactly the Actually

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Speaker 1: you've got a nice workout on that. But what is

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Speaker 1: so important to me, Ben Emmons, is if I look

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Speaker 1: at the German two year is essentially a global proxy

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Speaker 1: of negative rates. It's a vector and it's basically in

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Speaker 1: one direction. Do you just presume, with whatever the strategy is,

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Speaker 1: whatever the orthodox unorthodox soup that they do, that the

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Speaker 1: German two year will drive to a new negative yield

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Speaker 1: below negative zero points six zero percent. Yeah, I would

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Speaker 1: agree with you, Tom, That's that's right, because one that's

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Speaker 1: driven by that the positive rate, and and then future

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Speaker 1: expectations of more cuts in the depositive rate. That's that's

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Speaker 1: in that do your yield and and indeed you could

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Speaker 1: have more extreme level of this two year yield because

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Speaker 1: if you look at the history so far of what

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Speaker 1: what actually has had a major impact from from the

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Speaker 1: c B programs has been on that two year yield

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Speaker 1: in Germany, but that one has gone down really dramatically,

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Speaker 1: whereas the euro's being change. That's the proxy the German

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Speaker 1: two year yield to review, folks. It's it's been negative.

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Speaker 1: Let me go back and give you roughly the date,

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Speaker 1: or it flip negative, it flip negative about almost positive.

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Speaker 1: Call it November of two thousand fourteen. Within a quick look,

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Speaker 1: what does Mr drag want the German two year to do?

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Speaker 1: Or does he not care? Because that's what I'm hearing

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Speaker 1: in a lot of interviews. I think he cares more

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Speaker 1: about the broader impact of that program. If I read

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Speaker 1: back his speech from from able two thousand four teams

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Speaker 1: that he had in Amsterdam where he laid out the framework.

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Speaker 1: He basically laid out three points there so that we're

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Speaker 1: going to use four guidance, that we're going to use

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Speaker 1: credit easing with l t o s and they we're

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Speaker 1: going to use a broad base as a purchase program

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Speaker 1: to get our inflation was stable there two percent. That's

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Speaker 1: kind of his framework. Thinking now he's addressed all flee components,

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Speaker 1: so I think he's not so so concerned about this

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Speaker 1: really extreme negative yield in the two year German government

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Speaker 1: rather are that this this impact of his program along

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Speaker 1: those free lines that he laid out in that speech.

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Speaker 1: I think though that he is. He is concerned probably

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Speaker 1: and at used to be members sue about the constraints

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Speaker 1: that the banking system is again facing, especially when we

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Speaker 1: went through in January. So I would think that they would,

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Speaker 1: you know, can always add more liquid into the system,

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Speaker 1: but moreover, they want to look more specifically at at

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Speaker 1: the aspect of what happened in January at we want

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Speaker 1: to address that because it could devel the other aspects

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Speaker 1: of our program. Right. So, yeah, he he will care

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Speaker 1: about that negative rate, but he really cares about in

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Speaker 1: a broader context, if that negative leads to two percententvation

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Speaker 1: and broad based lending, then then it's fined by him.

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Speaker 1: And that's ultimately still their objective's happening right now, true,

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Speaker 1: and I think that's that's indeed what they would try.

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Speaker 1: What I think they will try and address is that

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Speaker 1: that they have seen like, well, we had some success

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Speaker 1: with the weaker currency and lower rates, but we haven't

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Speaker 1: had much success with credit extensions for that matter. The

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Speaker 1: for example, when they introduced what they called targeted lp

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Speaker 1: r ros, which is a is a lto program that

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Speaker 1: where banksically financed collateral. That's that's that's land to non

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Speaker 1: financial corporations that they may look to expand them because

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Speaker 1: the facilities only eighteen billion outstanding is very small. They

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Speaker 1: never had any kind of success. They may look at

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Speaker 1: alternatives to this too, that the credit spreads is still

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Speaker 1: relatively winding, or including bank spreads that they may make

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Speaker 1: tweaks there. They can purchuse corporate bounds, they can buy

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Speaker 1: financial death. They could do that or signal their off right,

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Speaker 1: and I think again drunk is really good about that,

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Speaker 1: but signaling something like that coming coming down the pike

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Speaker 1: to generate the effect and then get the compromise to

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Speaker 1: actually implement a program like like that. So I think

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Speaker 1: all those things are in the works. I'm actually for tomorrow,

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Speaker 1: and these really focused on how credit markets will respond

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Speaker 1: to to to drug as he announces this new program,

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Speaker 1: because the q E program, I think is largely prices. Okay,

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Speaker 1: Panamon's thank you so much, Leader Capital, because we brief

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Speaker 1: you towards tomorrow, and the drug presscraments will have that

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Speaker 1: all the details in the eight o'clock hour tomorrow. Future

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Speaker 1: is up seven from New York Bloomberg surveillance, cutting it

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