manus: are words enough? e.c.b. president draghi may be ready to step up stimulus. we're live from malta. the u.k. has benefited from e.u. memberships but points out the risks. luxury at daimler. new record sales. manus: welcome. this is "the pulse" live from bloomberg's european

headquarters in london. i'm manus cranny. decision day for the e.c.b. it is the run-up to today's meeting. mario draghi has said it is too early to decide whether to trillion are 1.1 uro bond buying program. very good day to you. let's get to it. what can we expect from mr. draghi? >> well, we can expect more dovish rhetoric. more talk that the e.c.b. is ready to step up if needed and is probably not to expect increasing q.e. and pay of government bonds in the euro area. several members have said they need more information and data to evaluate how q.e. is working.

manus: this is almost a splendid rerun of 2014 in many ways. the build-up to christmas. the build-up to the first quarter. let's deal with data because that is what we do quite well here at bloomberg. what does the data say in termsor q.e. working? i thought inflation was supposed to rise. >> well, inflation rose for a while, but then there was another fall in the price of oil. this of course has had anfect on inflation in the euro area, which is now negative. minus 0.1%. what they can take comfort from s that core inflation is stable. that underlying price pressures point to inflation and according to their forecast, eventually deflation will pick up in the course of next year. in fact, draghi said that q.e. is working better than expected,

even if a bit slower than what they expected. manus: i'm sure we will be speaking to you throughout the day. thank you so much. our bloomberg e.c.b. reporter. we'll bring you coverage of that e.c.b. rate decision at 12:45 u.k. time with the news conference starting at 1:30 p.m. but before that, we'll have an exclusive interview with the chair of the e.c.b.'s supervisory council. that is in the next hour. now we're joined on the phone by the finance minister of malta. mr. minister, a very warm welcome. >> good morning to you. manus: hosting the e.c.b. they are in town spending some money. good to see that you have the tourist numbers up. let's talk about the issue for europe which is the rising value of the euro. no sign of inflation. what would your conversation be with mr. draghi in terms of his biggest issue to deal with?

>> it is a member of the euro ours is a healthy 1.6%. we would like a very strong euro, eurozone. we are very worried of course. if the euro does not keep its weaker position because it needs to be stimulating exports and therefore stimulating the economies all over. we're, you know, so it does affect the exchange rates but also the policy. manus: you're quite correct. if i look at what's happening with the exchange rate, we're up 9% from a 13-year low in march. are you an advocate? do you believe in quantitative easing, minister? >> well, i think the central bank has run out of all the ammunition.

that is what is left on the table and it has to be done well. the problem is the complication because it takes two to tango and you have the uncertainties on both sides of the atlantic. a simple t is not straightforward gain so to speak. manus: the immigrant crisis, angela merkel opening the doors of germany. the east of europe balking at the concept of european policy. what do you make of this east/west european divide on the immigrant crisis, sir? >> we can understand here in malta because we had the same experience when we had a different type of immigration from africa. the first reaction is shock. it is one thing seeing it on television and another thing seeing it in your backyard. i can understand. sometimes the comments made, you know, you would think that they

are racist comments. they are not. it is a question of people having their normal type of behavior and all of a sudden, faced with a massive inflow of people and you just can't cope. so it will, you know, it needs some time for governments and their people to get acquainted with that and face reality. one should not go by the first reactions, but definitely, humanitarian europe can't turn its back to this. it needs to do whatever it takes to cope with this because, you know, especially the people that have experienced the second world war have to be more understanding. we're ase, near malta, faced with a different side from africa. saluatory so to

speak. they have people ready to work. you get all sorts. manus: minister, what is your biggest concern? i'm reading with some reasonable interest the portuguese story at the moment. i want to get your take on it. there is a title today, portugals, communists and themselves here and operate from no given that the region north africa is so unstable. malta is doing very well with its 5% growth. it is because of that. so, you know, it is disconcerting to hear so many extremists' opinions. but it is normal. the country who is managed to contain those and have certain stability will definitely have a

favorable result. you know, malta has -- is doing that. manus: minister, thank you very much for the time. enjoy the day's meeting with those tourists on your island. now, to talk more about whether or not the e.c.b. is likely to ease policy further in the onths ahead, we're joined by william. great to have you with us. minister eard the starting off the conversation about the euro. it is up 9%. no inflation. being hit by deflationary forces around the world. he is caught between a rock and a hard place, or am i being generous? >> i think he is indeed that is exactly where he is. he is facing different problems. f you put it all together,

autonomy actually is very small. the impact of what's happening in the developing economies has manifested itself into a strengthening of the euro against these currencies to a rather significant extent. these currencies, they represent more or less 50% of the, change rate of the euro. -- exchange rate of the euro. you can't do anything about that. number two, the fed policy. ok. the fed has been holding off. now you can have big debates whether it will be march or even later. point number three. to a very, very large extent, the effectiveness of quantitative easing works for your markets. doesn't really have a grip on that. when the equity markets were peaking in europe and april and then moving up again and then going now and again, q.e. will -- the liquid any the system.

you can extend this to other markets as well. it means that what has he agreed upon? psychology and for that, he is kind of raising the stakes by sounding increasingly dovish. manus: let's have a look. we have a graph of when the e.c.b. protagonists intervene in markets. there is a variety of moments, if you see back on may 18. this 114 level seems to be quite a trigger point. he has got to tread a fine line. draghi hopefully will add to this. is this a do whatever it takes moment? s this a may 18 -- may 8, 2014 in terms of moving that currency? >> no, because that was kind of a unique moment and, well, the

barn was on fire and it needed to do something. it is a fantastic chart. it is like verbal intervention in the market. manus: that is psychology, isn't it? >> it is psychology. the issue that you are now facing is that ok, you have been creating expectations. people are expecting he will sound more dovish today without doing anything beyond that and that means that the intensity of the debate for the december meeting will be even bigger, of course, and then he has to deliver. it seems quite clear that something will happen between now and year-end. should be december. and then of course we can have the big debates on how effective that will be keeping in mind that all in all there is reduced autonomy. that is a big concern i have. manus: i like that point you made. his control over those big issues is more limited. let's get to the nuts and bolts. are you a 17 billion euro security man?

are you an asset-backed securities man? q.e. 2, an extension typically is harder to have the same result. >> yep, that is clear. we have seen it in the u.s. and with any type of statement or policy, there is a reduced effectiveness of repeating the same thing. i think what is important is that it is showing decisiveness, to be credible, you must be decisive and then you can have a big bang per puck. what is also -- per buck. it is very easy to understand. i'm a fan of stepping up the pace rather than saying we will go beyond september 2016. going beyond september 2016 without doing anything else raises a host of issues. one is why are you already so necessity to go

beyond? doesn't it mean you're too optimistic? thirdly, are you really telling us you need to go into that bate where it is a q.e. flow phenomenon or growth phenomenon. step up the pace. manus: you're going to stay with me. we're going to get into mark carney and his yawning speech he gave last night. hird quarter operating profit mercedes-benz sales higher than ever before. earnings before interest and taxes from ongoing business 3.66 billion euros beating analyst estimates. mercedes is poised to overtake audi this year as the world's second biggest luxury car maker.

decreased.ncer drugs shares trading 1.2% higher. speculation that heightened political turmoil will deepen the nation's recession. oil companies were the hardest hit as high profile lawyers filed a report to open impeachment proceedings. nd a company that produces and sells metal and iron ore missed estimates. losses of $2.12 billion. p next on "the pulse," fwreg e.c.b. to the b.o.e. that is the bank of england. we're going to talk u.k. coming

up next. ♪

manus: bank of england governor mark carney has waited for the .rexit debate >> broadly speaking the evidence suggests the u.k. has

successfully harnessed the benefits of openness while avoiding so. drawbacks of reduced flex frblet which some continental european economies suffer. manus: that was mark carney speaking last night in oxford. a fully hedged speech. >> nice way to put it. manus: it depends which newspaper you read. it really does. he focused on the pluses and the minuses. what did you make of it? he did not say what would happen. that was not his mission. i'm a little bit surprised. what would you have in case of brexit or no brexit? what does it do? does it change the wayor doing business? the key concern is that we are in a period of prolonged

uncertainty. the question is what does it do to foreign investments and the currency and vems? manus: where is brexit going to pop? you come from a c.i.o. background. i know you don't want to encroach into that area. where is the most risky brexin your of opinion? >> the swiftest reaction you will see in the currency market and in the equity market. because that is just the way -- the element of long-term confidence is more physical. more driven by monetary policy, inflation, what have you. the key point is that you have a situation now and then you can have situations that have been stabilized. that is ok. what do you do in the meantime? that is the real point.

manus: we have negative is ation, so core inflation around 1%. wages are moving slightly higher. when can carney go? can he go before the fed -- we briefly mentioned the fed earlier or is he ham strung by this disinflation risk as draghi is facing, it is a fed are facing? >> he has the option to wait. why would you rush and go before the fed? if you would run the risk that sterling would all of a sudden become the darling of currency, mardi grases would like to go along, therefore having a negative impact on inflation. he can very easily wait to see what happens. but then the key issue that you're facing is that the u.k. ike so many other economies of sending a big message out there

which is the globalout put cap is negative and it means inflation stays low. manus: that is what pimco was saying. >> that is also related to cap ex. manus: yes. william, thank you so much for putting everything in context for us today. william from b.n.p. paribas. s.u.v.'sise 31% as the drive record sales. we're going to break the numbers down for you. stay with "the pulse."

manus: daimler reported a 31% rise in third quarter profits with new s.u.v.'s driving record sales and consolidating strength in the luxury car market. hans nichols is stand big in berlin. mercedes-benz overtaking audi. this is a great story, hans, isn't it? hans: it is especially good for you because i know what your preferences are. they are for luxury. last month daimler had the best month. they actually came in first, overall these numbers are impressive. they met expectations. profit was higher. however the stock is not reacting all that positive. earlier it was down and then

climbed back up, in part because what we have going on with daimler is concern about the future. how much growth prospect is there? concern about the diesel industry. we caught up with the chrysler c.e.o. yesterday and here is what he had to say about whether or not diesel would be impacted. >> this last set of events indicated the government system inside volkswagen wasn't working and that things could happen unbeknownst to the leadership or at least with their involvement but it was a governance failure. now people are stretching into a failure of diesel or a failure of this. i don't think that is true. hans: the c.e.o. was asked whether or not diesel would be affected me. said he hasn't seen anything in the daimler numbers yet. we had remarkable growth in china. on the year daimler is at 31% in china.

they love those s.u.v.'s over there. not so much with b.m.w. and audi. manus: he has the right understated luxury car. you can sell it to just about anybody. next on "the pulse," we're going to get a gauge of this country and the strength of the u.k. economy. have you bb been shopping this month? ell, it is retail sales. join me on twitter aten manus cranny. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

manus: welcome back. i am manus cranny. let's go straight over to ryan. reporter: we got the retail sales. the month of september went gangbusters. up 5.9%. the expectation was that they would go up 4.7%.

this is a five-year historical chart of u.k. historical sales. at 3.5.th they came in let's look at the pound. we were getting very close to a $1.55. it actually went through $1.55 to the pound there for a moment. we are just shy of that. keep in mind, the market might not read too much into these numbers. they are very volatile, but come on the back of two other readings in retail sales we have gotten in the last month that for also positive. there was a lot of expectation that these numbers would be up. indeed, they are. back to you. it up.they are cranking let's get you up to speed on the rest of the headlines. , the ecb is meeting.

roche just reported a 6% increase in third-quarter revenue. to $12.4 billion. a number of late stage clinical trials this year. it counts on new ruddock's to offset -- new products to upset generics. to the ceo of wells fargo. .s. economyt the u is strong. >> we cannot argue with the 5.1% unemployment. biggest risk to the u.s.

economy is what is happening outside the u.s.. bank: the brazil central has signaled a possible rate rise as inflation continues to cripple the american economy. presidenty's faces impeachment. let's speak to the reporter on global markets. good to see you today. ring us up to gate on where we are in the impeachment ross says. reporter: not a great deal of movement since yesterday, since these three very high ranking figures in the legal establishment in brazil put forward the request for proceedings, impeachment proceedings, to start again. these are now being looked at by the man who has to sign off on these before he goes to the

lower house for consideration. he has not looked at the request yet, but has said he will be the man who decides exactly how long it will take you for it goes to the lower house. vote.we have a an order for deliberations and probably, a lot of jockeying before it even gets to the light of day. it will be a long process. it by never see the light of day. we have to consider that possibility. all investors are looking for is some kind of speeding up of the process so we know where we stand going into the impeachment debate. manus: think investors are voting with the information. this is the worst emerging market currency. the stock market is not exactly roaring, is it? reporter: the stock market is down 17% since its peak earlier in the year.

300 billion dollars wiped off of the value of brazilian shares. that is pressuring inflation. we had inflation report out yesterday. it showed we are closing in on 10% now. above 9%, more than double the central bank. it does look like the central bank governor is going to have to take some action, either towards the end of this year, or even at the start of next year. that is to try and rein in inflation. he is walking a bit of a tightrope. the economy is in a very deep slump. to contract about 3% this year and another 1.5% next year, according to some of the forecast. he is between a rock and a hard lace. -- hard place.

there were several increases this year already. it looks like he will have to go further and keep prices range back. this storys see how unfolds. brazilianuss the situation. eme director of the m strategy. welcome to the show this morning. what is different about this impeachment? we don't know if this will come to fruition? i think because it comes from one former and very prominent figure in rousseff's party, there is more weight in this impeachment. manus: we like statistics.

you have got yours now on the potential for impeachment. you are off to brazil quite soon. i want to know what he will be asking and who you will be meeting and how you will craft your opinions. give me the percentages. the success of the impeachment. these proceedings have to knowledge by the president of the house. once you put it forward to a vote, you need to thirds majority in the house. the probability is 30% that it goes through. dilma rousseff still has a lot support from her party and other members in the congress. at the moment, looking at who will vote for this will be difficult to see a majority to outcast dilma rousseff at the moment. manus: she is not going anywhere. there is a great article online that talks about her.

it talks about what she went through in her youth. this is a lady not retreating. >> president dilma rousseff is not going to leave easily. she is going to fight. this process of impeachment is going to take months. that is, unless she resigns. continue in a political stalemate for some time. manus: let's talk debt and currency and paralysis. the brazilian reality. it is on its knees. this is the worst performing currency. >> the worst performing currency up today. it is 32% down. i put out a level -- manus: where are we at the close? >> $3.94.

i think the country is in a big inflationary cycle at the moment. 3%.omy is falling to just inflation is rising so it will be difficult to see positives at the moment. manus: you read these reports, they are all getting swagger. are we anywhere near that potential moment of when you see value in these kinds of aggressively priced markets? >> i think you have to very careful about this. downgrade,e further if you don't see political improvement in the next two mon ths, brazil will be downgraded.

you will see economic data continuing to deteriorate. all in all, the situation is gloomy for brazil. that is, and less we see the fed pushing out hikes to the end of 2016. that will improve significantly the global market for emerging market current fees and the brazilian reality. it would not continue to fall. manus: what do you make of this? reprieve in some of the markets. do you trust that in emerg ing market. >> they got squeezed out in the long run. has pushed out such high expectations. see by the sixth

of november that is the last that for markets. it is a strong number. a lot of people are looking at the sixth of november for the u.s. decision. it will give us the last important clue to see if there will be a hike. manus: that will be the crunch day. in.k you for coming the director of em. billionaire pulse," bill ackman gets a dose of his own medicine. as the big wall street name lays into one of his picks, we will talk about pharmaceuticals. up next on "the pulse." ♪

manus: welcome back to "the pulse." here are the top headlines. the challenge is to show that he is ready, more ready than ever to step up to stimulus with trafficking investors over the euro area help. it is too early to decide whether to expand.

we will be taking that decision live here on bloomberg. the bank of england governor mark carney has waded into the debate. in his speech last night, he said europe had benefited from the european union. >> broadly speaking, the evidence suggests the u.k. has successfully harnessed the benefits of openness afforded by the eu membership, while avoiding some of the drawbacks of reduced flexibility from what some continental europeans economies suffer. the production targets for diamond for the third time this year as demand weakens. the company also lowered iron and copper targets. it is declining this morning 3.27%. roche, the biggest maker of cancer drugs, has performed a 6%

increase in the third-quarter revenue. bloomberg in to his press interview of the day. >> roche is fully focused on highly innovated differentiate medicines that provide value for medicines. as such, our portfolio is less exposed. not only in the u.s., but around the world. u.s.,elieve that in the we will continue to reward innovation. if we provide true value for patients, that is. manus: joining us is the bloomberg intelligence director. sam took part in that interview with jon ferro. give me your take away from this. part of this is what is happening in the u.s. sam: the position that roche has is a great position.

much of their business is from oncology. that is one area that you can actually see real patient outcomes. you treat somebody and hopefully, they survive. it is a easy calculation to make. pricing a drug for that you can -ecoome much better pharma analysis. the pressure on requirements for rebates and discounts by payers in the u.s.. most pharma companies do disclose it. 67% of their gross revenue, which they disclose. roche is at the very low end of this rate. manus: they are nate very privileged -- they are in a very privileged position in the market. sam: privileged because they earned it. companies are spending a huge

amount of dollars doing research. r&d.over $10 billion in find drugsuired to that genuinely move the paradigm. if you do that, i think few people will get in your way in . manus: what about the agenda of valeant. this is the pharmaceutical company that took a smack yesterday evening on the u.s. side. this surmise me of the canadian blood area to see full -- canadian blackberry legacy. this goes back to how they treat sales. essentially, he came and said we think you are stuffing the channel. the company's sales from you to some pharmacy chains you own are reportedly potentially as revenue. they are not.no

recordedents are not revenue. somebody has got to be right here. citroenbe talking to later on today. my number of versions of these, that is very difficult to read. sam: i think you need to. this is one of those documents where every single word matters. you need to sit down and check it. do thature citroen will today when we have a conference call later on. i think it is 5:15. we will be in a position to question them on that. manus: in terms of the

discussion, we also have ackman adding to his position. he bought more. sam: i would be scared if i had 20% of my fund there. i am not bill ackman. i like his hair and bank account. he is obviously thinking that he knows better than the market. there is a truth in there. is this an enron? that is what citron called it. i am not sure it is. the end of the day, there is still a $50 value on it. to worry about is, how does this in the long run, impact the business model? there are two pressures.

in these cases, not in large pharma. will these prices impact the ability to do acquisitions. much forank you so putting that in context for us. a little bit later today we will be speaking to the founder of citron research who accused ealeant of an enron-lik strategy. you do not want to miss that. that is 5:15 this afternoon u.k. time. valeant has denied the allegations, as sam made clear. he said they are false, is leading, and an attempt to driv e down the stock. that is all the context you need

in that conversation. next on "the pulse," we will talk banks and regulation. here. up, right ♪

manus: welcome back to "the pulse."

let's get a little bit of an angle on the market. we are waiting on the european central bank. ryan joins me today. eye?has caught you arr the traders are going to listen to every single word. it will impact the currency. ryan: we are in the pregame show. have a few charts for you. he first one is the euro october and review. it shows you where the euro again. one half ofd about 1% since october 1. not a whole lot. ago,an see about one week people changed their mind about the direction of the euro. aey are now anticipating devaluation. you canook at options, see the devaluation coming into the future. that is because they think more

qe is on the way. now, let's go to chart number two. the ec be pregame show, pass the popcorn. this is how much volatility you have in your euro-dollar trading right now. not a whole lot. you have to go all the way back to the beginning of august to see volatility this low. everybody is sitting on the fence. you have seen our survey. we asked 53 economists what you thought would happen. zero of them thought the ecb would raise rates. one thought they would announce a boost to qe right now. a healthy majority thought it would come at the end of the year at the last ecb meeting. sayut of the 53 economists it is coming. we had those really good earnings reports, one comes to

profit. profit is up 31%. the share is down 3%. it looks like reason may have taken hold. they are back to where they were when they closed yesterday. thank you. manus: great retail sales. that european central bank decision and the news conference, jon ferro will take us through that. stay tuned, we have surveillance coming up next with francine lacqua. ♪

francine: carney weighs in. the bank of england governor p ionts out the risks. meeting of the ecb 2015.

with all of the new capital requirements on banks in europe, we see the ecb board chairs. this is bloomberg's " surveillanc"