policy unchanged. 2017bond yields climb to high amid optimism in the u.s. economy. opec cuts not enough to stop the glut. from new york city, good morning. good morning to our viewers worldwide. i am jonathan ferro. president draghi and jamie dimon. shy.: jamie dimon is not he will express his views. alix: it was interesting that j.p. morgan closed slightly lower yesterday despite the entire yield curve backing up. jonathan: looking forward to that conversation. latest break the ecb's rate decision at 7:45 a.m. eastern time and bring you live coverage of mario draghi's news coverage at 8:30 a.m. eastern time. 8 day losing streak for treasuries. when we make it nine? 257re up a basis point to

on the u.s. 10 year. the euro firmer against the dollar. alix: take a look at commodities. oil below the 100 day moving average. that is significant. i wanted to point out it is not just oil that is weaker. it is the entire commodity complex. iron ore, copper also down. gold a little softer as well. it is important. not just about oil or the oversupply, but weakness permeating. jonathan: let's get over to pray for now. president mario draghi predicted to leave interest rates unchanged through the end of 2017. joining us for more ahead of the decision is jamie murray and matt miller. i wanted to start with a simple one. what are we expecting today? we are not expecting change in monetary policy for the ecb today, but we are

expecting a change in the ecb inflation forecast. 1.3%ank currently sees inflation for 2017. running much hotter than that. it is at 2%. we expect the ecb to nudge that up this year. comes off in 2018 and back in 2019. the question is, when is mario draghi beginning to taper off the stimulus? he will lower his bond buying from 80 billion euros a month to 60 billion euros a month next month, but that was planned in september. jonathan: how does the ecb and president draghi say yes, we can be optimistic about the economy, but we cannot get ahead of ourselves? think one of the things is to not get too carried away about economic strength either, and the reason inflation is going up is a slightly higher

price of oil, which will squeeze income. this is a bad source of inflation for the economy. jonathan: as you look at the , that hasg program been dropping. the conversation in the minutes was a temporary deviation away from the capital. will we have another today?ation about that perhaps the italians buying more italian debt in the spanish buying more spanish debt? matt: also buying at the front end of the curve. over the past few months, if you look at where they are buying, it has gone from durations of 12 years to 16 years to nine years and now lower closer to 3.5. they are buying closer to the front end of the curve and higher german debt.

also higher peripheral debt in italy and france and spain as well. that is evidently the conversation we will have with mario draghi in the press conference here. asks, i wille raise my hand and ask. jonathan: we expect you to. jay demerit sticking with us -- jamie murray sticking with us. alex, i want to begin with you. there are people that believe the ecb may have to raise interest rates at some point, and i think the argument goes as follows. if you drop the purchase rate from 80 billion to 60 billion because the deflation fear no longer there, maybe you should raise the deposit rate from -40 to -30 for the same reason. do you buy that argument? >> it is early in the game to be talking about interest rate hikes from the ecb. one of the reasons being although the deflation theory is

behind us, inflation in europe is looking quite subdued. i know it has rebounded strongly, but if you strip out the impact of energy and look at , it is still well away from that 2% target. i think we are still well off an an interest-rate hike. we continue purchasing assets at this 80 to 60 going forward. alix: i understand argument quite well, but if you look at the supplies, you take a look at financial conditions when it comes to the eurozone, they are still negative, but we have had a huge run-up of almost 100% in the past few months. if that is the case for the fahrenheit, why not a case for a taper conversation? >> the ecb finds itself in a similar place where the fed has found its the last few years -- itself the last few years. the fed overstatements welcome with qe and waited too long to

move off of zero. looks like the same case with the ecb over the next few years. alix: what does mario draghi do with that? >> the one thing people are talking about is changing the balance of risk description in the ecb statement. at the moment, they say interest rates may be all lower at the present rate. to me, that is a valid thing to say. they have had persistent underlying forecast. i think the risk is still skewed to underlying inflation lower so that wording should be kept. that is one thing he could change if he wanted to appease the folks in germany. david: putting it simply, when do they run out of bonds to buy giving some of the issuance restrictions? how soon is that deadline coming up? >> it is difficult to measure, but we still have some way to go before we get that deadline and what we believe will happen once

the political crowd began to clear and people focus on the fundamental improvement that has a happening in the eurozone. dr. draw play will say we -- draghi may even take it one step further and provide guidance how to taper it down to. zero.to it will not put the t under much distress. david: i understand the issue is right now is about 15 billion total. even at 40 billion, you are still soaking more out of the market than putting it. will kind of pressure does that put on the market? >> it does put pressure on the market. yields are inventively distorted in europe, but it is also the compositional issue. germany runs a balanced budget. they are not issuing a lot of debt. i am sure the ecb might like to be buying core debt, but they end up having to skew away from

the p and to the country -- cap ital key. it introduces a lot of political questions for the ecb that does not have an analog here. jonathan: to this point, how does the ecb avoid a major bond can from as they -- tantrum as they tried to exit the program? at the moment when you have yields -50 basis point in the french curve and almost -100 in germany, that can be a vicious turnaround in yields. >> yes, particularly for peripheral bonds bearing in mind that the ecb owns about 12% to 60% of peripheral debt depending on what country you are looking at. stepping out of the market and limiting asset purchases will see limits. it is an exercise in communication from the ecb and

dr. mario draghi in particular, highlighting the fact that if they believe they need to, they asset purchases again going forward if they believe financial conditions tighten. the ecb withdrawing monetary policy should be visible of strength, not weakness. it is a sign the european economy is getting better and does not need the emergency medicine to be has been providing. alix: what is your top trade in europe right now? alex: we particularly like eurozone equities. the aspect of this economic divergence has been taking place between the u.s. and the rest of the world. that gap will begin to close later this year, particularly once the political clouds clear. you can see european equities begin to move higher as investors jump back in again. alix: bullish on equities for europe. good stuff. great to see you. coming up, draghi's next move.

we will break the latest ecb decision and bring you live coverage of mario draghi's news conference at 8:30 a.m. francine lacqua with a sitdown with jamie dimon, the ceo of jp morgan. you definitely do not want to miss that. this is bloomberg. ♪

>> this is "bloomberg daybreak." tears says it will pursue strategic options would kenmore and diehard brands. to actively managed his portfolio. the loss was more than expected. another step to a $30 billion l.vestment program for shel

billion., about $7.3 the buyer, a unit of canadian natural resources. shell stocks soared last year. 8:30 eastern time, the u.s. government comes out with initial jobless claims, the last big number before tomorrow's february report. they probably added 200,000 jobs last month. that is your bloomberg business flash. this is bloomberg. david: thank you so much. tomorrow is u.s. jobs day. that seems to be the only thing standing between the markets and a family hike. still with us is alex and stephen. he was one of only two primary economists last week who saw this march increase coming, and i was before we heard from the fed. congratulations, you were right. basicallyanet yellen

said we will raise unless there is a disaster. what would be a disaster? stephen: i think you would have to have a flat jobs number. david: zero growth? stephen: yes, something along those lines. we saw this happened last year. the fed with setting us up for a move in june and the many jobs report came out in early june and was low and they held off. the environment is different today. the economy has made a lot more progress. inflation is that much higher than it was a year ago or roughly a year ago. everything toes you the labor market is really solid right now. i am with the consensus. i expect the 200 number. i think we get a rebound in wages. every one of those parameters would be arguing in favor of a grea rate hike. david: where are you, alex? alex: somewhere around similar numbers.

several hundred thousand would be enough to knock the fed off of a march rate hike, but it would have to be a bad number coupled with a bad wage growth number as well. after all that we have had over the past couple of weeks from been officials. jonathan: the labor market has been solid for a while, but what are we doing posting 300,000 still?almost every month stephen: the job growth numbers continue to be very strong. over 200 is probably something that cannot be sustained over the long-term, buffer right now, --buffer right now, it was a little get a short time of accelerated job growth. using the participation rate can begin to improve and maybe conversation

shift to a little more slack in this labor market and the new realized? alex: that is one of the things a bit elusive when it comes to wage growth. there is some room to run still within the labor market in order to get that tightness coming through and feeding into the weight growth numbers. there is clearly some room to run. we cannot keep printing these incredible payroll numbers for ever and ever. there will be a point when we start bumping up against the limits. that is when the fed will need to be taking some sort of adjustment. i don't think it will be hit this year. we can see that at the end of 2018 an into 2019 before we encounter the problem. david: it is clear whenever we hit it is a lot later than what a lot of expertly telling us a year ago. they thought would be coming down at this point. is this good for the dawn trump administration? in that thereews is potential for growth? alex: it is a difficult one to manage.

the is a lot of people have dropped below the surface from the labor market that have become disenfranchised and just stopped looking. warming up in the u.s. economy and global economy has seen people starting to come back to work. that would suggest that is a few more people dusting off their tvs and looking for jobs again. they are the ones that will be starting to come up in the numbers. it suggests the trump administration is right and highlighting areas where the labor market can move. david: do you have to get increase workforce get growth? maybe there is more workforce out there? stephen: perhaps. that can only take you so far. eventually, we will start to run into a spot where it is hard to find workers. in lot of firms are already complaining we are there. a year ago, the tightness in labor market seemed to be in pockets, specific javascript is

and whatnot, a and now it seems to be generalized. specific job areas and whatnot, and now it seems to be generalized. we will continue to see job growth after we have reached that elusive full employment mark, but i think wages will continue to gradually creep higher and the labor market will keep -- jonathan: if you look at it become you think it is boring. bonds is significant. nine days of declines. 256 on the u.s. 10 year. what is that screaming to you, currently? alex: i am surprised the 10 year ed higher.eep what is happening is quite a lot of money on the sidelines that needs to get to work, and they are looking at the u.s. 10 year. .6, and they are saying i

will have some of that. that is why we have seen them being stuck relatively range bound this year, especially after the big move we saw after the trump rally. that can continue as more and more institutional cash gets to work and put a bit of a lid on how far the u.s. 10 year can rise. jonathan: very quickly, at what point does it by into the risk rally? alex: it is a difficult one to say. for us, we are still well a point where the rate hiking cycle starts to hurt. until thet be two-year reaching a 4% yield. that is when you start seeing negative correlations between equities and fixed income markets. right now, we are sitting close to 1.3% on the usgs. we are still well off the point where equity markets are stabilized from an interest rate cycle. jonathan: great to have you with

us. stephen is sticking with us. coming up on this program, francine lacqua will be sitting down with jamie dimon. do not miss this conversation. 7:45 eastern time. from new york city counting you down to the market open about two hours and 10 minutes away. futures a little bit softer. -25 on the dow. you are watching bloomberg. ♪

>> moving 10.5% over the last two days. u.s. production is moving higher. u.s. stock piles moving higher. joining us now from london is stewart. is this capitulation? >> no. i don't think we are there yet. we have built up a massive net long position, and it will stay

that way over several weeks. what we are seeing at the market , i they are anticipating a massive plan in prices. it is more that they are taking bets off the table and not exciting a rally. i think this is a repositioning in the futures market. alix: but it does beg the question, when we want up seeing it when we start seeing stocks higher than future prices? this is the wti contract and the brent contract from december 2017 to december 2018. you get a nice read where the market is expecting oil to go. the blue line is zero. when it moves lower, you are entering an oversupply market. the wti just went negative again. what is it going to take for us ?o see that opec is not a local

enough about extending the agreement. they will need to come in the next few weeks and start stating their intentions about what they intend to do about that. we have some problems in libya. there is some uncertainties there about how much supply we will be able to get out of the country given what is effectively a civil war going on. they are clashing against each other. at the same time, we have dissonance rebound in u.s. shares happening faster than anyone anticipated. all of those are combining to make people a lot more nervous about the outlook. are we expecting a big rally back up? alix: even harold coming out and saying take it slow. thank you so much. stephen stanley is with us. if we get continued softness in crude, especially wti under 50,

what is that due to inflation expectations? stephen: oil has been plus or minus two dollars to 50 for months now. i remember when it was moving 5%, 6%, 7% a day. lled into aten lu sense of a stable market so a move seems a lot bigger than it really is. oil has been a little bit out of phase. the cpi numbers and other inflation numbers are adjusted and it is a well-established pattern for oil prices. this year, it has been a little different. on theincreases seasonally adjusted basis in the winter when you usually see declines. it feels like now in the spring when oil prices are usually maybe we don't get that. alix: the idea is it will not be the same headline contributor. stephen: no doubt.

we have seen a big adjustment in year-over-year numbers for headline inflation, and i think we are getting close to the end of that. maybe february or possibly march is the end of that run-up. we should plateau a little bit going forward. alix: great to get your perspective. thank you for joining us. it is going to be fascinating for me to watch. i am in oil nerd. jonathan: you are referred to as a nearby other people. we can talk about that in the commercial break. we break down the ecb's latest decision at 7:45 a.m. eastern and bring coverage of mario draghi's conference at 8:30. an important conversation with jamie dimon after that. you are watching bloomberg. ♪

jonathan: from new york city, i am jonathan ferro. the you up to speed on the markets quickly as we count down to the ecb decision. futures a little softer on the dow after a three-day losing streak after both major #four

down by 1/10 of a percent two hours away from the open. the fx market like this with a firmer euro up by 2/10 of 1% against the dollar. the treasury market is worse for a ninth straight day. yields climb higher a little bit. the yield on the u.s. 10 year this morning is 2.57. that's the story. let's get you to news elsewhere. emma: in the u.s., republicans are one step closer to getting rid of former president obama's affordable care act. committee approved a measure that would remove the tax penalty for people who do not buy insurance. it would replace income-based subsidies. groups have come out against it. scotland may hold a second referendum on whether to stay part of the u.k. late next year, says thereo one who

must first be very about the exit from the european union. scotland voted to stay in the eu. asependence is inevitable the u.k. softens the brexit stance. trial today.nt on he has denied any wrongdoing. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. jonathan: thank you very much. bigbond market gets a shakeout supercharged by the adp report. we have had a nine-day losing streak for treasury. yields climbing up to 2.57 on a u.s. 10 year. what does this mean for the u.s.

dollar? you assume yields go higher and the dollar goes with it? that is the base case right now. yields keep going higher and the dollar rides up the back of it and gets stronger. do you buy that argument? >> it is a pretty good argument and you have to have a pretty good story to go the other way. at this point, i would say the bigger sensitivity is in emerging market because that is what investors have been buying the first two months of the year. they think the euro weakness, yen weakness, g5 weakness will be there, but that will not be the bigger story. jonathan: you see that happening? we grow tothink once 55 on the 10 year, we are in territories where markets did not expect to be in. it is breaking to the highest levels since late last year. the message to the market that he positions they have been quite complacent about our

something they have to re-examine. jonathan: looking at the risk rally in general, let's look at the risk rally in fx. that canow where bite into the you? -- yen? >> the current level is pretty bad. if we go about 2.60, that would be the cycle high and sent a real signal that things were changing. even now, the positions are getting re-examined. it is not just the fed putting march on the table, but the markets thinking that if we continue to get this string of very strong u.s. economic data, it does not matter what the fed conveys at the meeting. they will hike faster than the dots say. david: how much of it is what you have just been describing with the yield is and how much is fear of protectionism from the trump administration? >> we have been there, done that

come about through a couple cycles of protectionism. there is no real news over the last three or four days on the protectionist front that would lead to the selloff. i think this is macro markets. a look at you take the fed, if they come out and sound more hawkish and we see 2018 seeing more hikes on the table then this year, what is the potential upside for the dollar? >> from the fed perspective, what they have to do is convince the market that what is priced in now, which is about 2.6 hikes were they to do that, it is not really want to send a message yet. i think we will see the dollar rally probably break the lows of the year against the euro. i think that the fed is still debating.

that is the debate within the fomc whether they should send such a strong signal right now and they are doing march or whether they should indicate they are going to wait and see, that this was precautionary but not something to indicate three going on four is now their base. i want to hit on what is moving today, and that is oil off by over 2%. what is the effect we will see to commodity currencies on that? >> canada is very vulnerable. it is there. a lot of long positions in the russian ruble could be vulnerable. that is a pretty straightforward trade. we will see those. jonathan: as you look ahead, crude is rolling over, potentially damaging the reflation cause on the back end of this year when the basis becomes less positive for the

european central bank. the place to the ecb that rates will stay low for an extended amount of time and maybe even lower. do you see the ecb turning against that pledge in the coming months? whatey might get rid of will even be lower today. it is not that we are sitting around debating with clients whether or not the ecb will take rates another 20 basis points into negative territory. but i do think that overall, it will be hard for driving to draghi to sound dovish today because you know the council has not given him that leeway. if there is anything that comes thethat is kind of hawkish, market will conclude that even now the governing council is putting the squeeze on him to sort of pullback from the offer dovish position that the ecb has had.

there -- skewwed there. if he is hawkish, the euro was once be bigger than if he is not dovish. jonathan: over the last month, we have had an economy tight range of about one dollar and five cents and barely reached in either direction in the last month or so. what is your base case? >> i don't think that the upside risk to the euro is that big. he will not sound super hawkish. the market might be a bit disappointed. he tries to play a down the middle was likely. the biggest stories the u.s. economy, the u.s. data, and there is still fiscal in the background in whatever form it will take. the long dollars story is the one that we have to focus on. the key issue is getting the timing right in terms of when all the factors begin to align.

alix: is that why we are just at 1.05 on euro-dollar despite the other women rate in the eurozone is at levels we have not seen 2009? is that why the euro has not been able to trade out the hard data? >> there is that. there is also that as much as the economics, the politics. we have the french and dutch elections coming up. when the ecb is going to have to start thinking about 2018, we will have the italian election in the crosshairs. the political developments will make it really hard for the ecb to be credibly hawkish, even if some of the elements of the ecb try to sound hawkish, but the risk is on the other side. there is little that can be said that will sound dovish. jonathan: beyond the ecb come after the french election, talk to me about prospects for a mount up in that currency pair given the following, that we

have had rate differentials blown out to the widest since the euro area i believe and given the fact the headline risk potentially after the french elections just will not be there. was the potential for a real mountain -- what is the potential for a real mount up? >> maybe 1%, 1.5% french election risk placed into the euro has come off in recent days. once we get past it, the holiday will be relatively brief. it willear progresses, be the italian election and the fact that the election calendar and europe is never going to be clear of these political risks even after the french and german elections. there is always five or six elections a year always revolving around the same political issues. jonathan: did he just say greece? alix: bringing it back to 2012. jonathan: great to have you with

us on the program. coming up, the ecb rate decision is next. we will break that down and bring coverage of president draghi's news conference at 8:30 a.m. eastern time. you can follow the decision using the terminal option tv . it is a conversation with j.p. morgan chase chief executive officer jamie dimon is coming up. this is bloomberg. ♪

>> this is "bloomberg daybreak." i am emma chandra and the hewlett-packard enterprise greenroom. coming up next, and inclusive interview with jamie dimon -- an exclusive interview with jamie dimon.

jonathan: we are two minutes and 10 seconds away from the ecb interest rate decision. matt miller is outside the ecb headquarters in frankfurt, germany. if imiller looking to see was accurate in two minutes and 10 seconds. what are we looking for? t: we are not looking for any change in rates or monetary policy. what we are expecting is a change in mario draghi's outlook. i was listening to your last conversation. very interesting to see if i remains dovish or succeeds in remaining dovish in this press conference. we will follow the announcement in about 45 minutes because he is expected to say inflation is currently higher than they projection of 1.3% -- their projection of 1.3%, especially here in germany. jonathan: the political pressure is interesting, but it goes both ways. a lot of attention has focused on the french election,

redenomination risk, etc. pressure comes the other way from germany. what is the update? matt: well, we heard one this morning giving a speech saying he thinks the ecb needs to make a timely exit into an entry. not think they need to get out of monetary policy right now, but saying they need to start thinking about how to do it because he thinks monetary policy has gone as far as it can and done as much as possible. now, it is only hurting what his constituents feel at home, which is inflation. when we talk about headline inflation as transient, we are not thinking about all the people that feel it. corner of her think of food and oil, which are the only things you need to live beside housing. those numbers have gone up by 2%, some places 2.5%. jonathan: matt miller outside

ecb headquarters in frankfurt, germany. thank you very much. the ecb decision about 10 or 15 seconds away. the politics in germany, the data itself which has been picking up. the optimism around it and keeping monetary policy unchanged with rates as your percent. refinancing facility rates remain unchanged at ecb. 0% with what pretty much everyone forecast the. the positive rates facility in line with forecasts at -40 basis points. -0.4%. ecb saying asset purchases will be 60 billion euros a month from april to december. the ecb keeping asset purchases at 80 billion a month until the end of march. alix: the ecb says qe will run

into inflation on a sustained at the goal. of the conversation was what it was at -.9% being good enough for the doves to revise the outlook. it seems like they are committed to that moving year two. jonathan: the ecb sees rates at present are lower levels for an extended period past the qe horizon. for many of you out there looking at the nuances or the potential for the change around, no change to that statement. no change to monetary policy. we will go to the news conference and 45 minutes time and get the latest forecast from the ecb, but unchanged in terms of monetary policy, the outlook unchanged as well. we can say across to francine lacqua now in paris. she is now with jamie dimon. francine: we are here in paris at the 2017 j.p. morgan global markets conference. iss is where mr. jamie dimon

here with us. thank you for joining us. we talk about economy, business, politics. what are your clients most worried about? jamie: first of all, happy to be here.unbelievable day of the conference with some of the best investors in the world, best speakers in the world. business and economy go hand-in-hand so if you look at the economic indicators around the world, america is doing ok, europe is doing better than people thought, japan is doing better than people thought. the economic indicators are pretty good. i think business in the u.s. is going confidence because of policies. we have tax policies, and for infrastructure policies. that will be more around trade, whether we get that right, north korea, and things like that. francine: are you confused about what this means?

what our president and his and his vision going to do for the european economy -- his administration going to do for the european economy? jamie: top professionals in the military, defense, secretary of state, secretary of treasury, national advisor. serious people with deep knowledge and experience. they are committed to a growth engine that, and that is reducing corporate taxes -- gro wth agenda, and that is reducing corporate taxes. i think growth agenda is good for all americans. lot.ess has jumped a probably because of the progrowth agenda. francine: do have any doubt he will be able to follow through? jamie: the republicans have the house, senate, 30 plus of the governorships. they have a better chance of getting those things done. i don't know the exact timetable. the euphoria from the positive

growth and proposed businesses there. i have pretty high confidence. everyone wants good infrastructure. most people acknowledge now it is time to look at the regulatory regime and recalibrate and make sure it is both conducive to growth and does not hurt small as this. -- business. francine: what is the question you get asked the most? is it trump or china? jamie: how come you will not take our deposits? [laughter] jamie: how come the cost of rico is so high? it is mostly around the administration. that is traditional. you have a change of leadership, people will be concerned, interested, etc. around the world, it is mostly about trump. today at lunch, i asked, what do

you want to talk about, and we do not get to trump until the seventh question. francine: what was the first? jamie: a clash of civilizations, regulatory inclusive capitalism, things like that. francine: they are concerned because it will affect their investments or because it is more intellectual strength and being smarter about how to invest? jamie: thinking long-term. capitalism can do a better job of creating jobs, middle ages, helping skills, helping get kids jobs, helping lower wages. business should play its part for all americans, including expanding things like the earned income tax credit. most are socially advanced. they give medical benefits, training their people, but we can do a better job at some of the policies that if the communities. it is true in europe, the u.s.

education is important to business hiring people. francine: it was a trend that was before or did president trump awaken the animal spirit? jamie: it seems like he has woken up the animal spirits. we have never had such a progrowth president since the founding fathers. i am after sure that is true, but consumer confidence, small business confidence, business confidence all skyrocketed. is a good agenda. -- it is a growth agenda. francine: will it be difficult to implement? how much of what is expected is priced in? even if he does not deliver a tiny bit, i we going to see a correction? jamie: i don't worry much about that. stocks went up rationally because of the growth agenda. now they have to do it. it will take time. you will have a lot of fun talking about what tax scheme and infrastructure scheme and how good it will work.

but if they get it done, even part of it, it will be good for growth, jobs, americans. i am confident they will get that done. francine: will you get that right, regulation for wall street banks? jamie: we think so. a reasonable voice to look at those things that need to be recalibrated, coordinated. there are too many people involved in mortgages. we don't have mortgage lows yet. this is for lower paid first-time buyers, small business owners. we need to do it for all people. no one could rationally say it fair.ne rationally, just open up, have a conversation about the side effects and consequences, and can we get the economy going faster? if you do not have a healthy financial system, you are not going to have a healthy economy. keep that in mind. it is for th good for the citizs

of the country. damaging the financial system is a bad idea if you want jobs and growth. you feel that is: dialogue is healthy and constructive. jamie: directly through gary cohn and steve mnuchin. -- i am a firm believer of collaboration will win. finger-pointing will not. there are solutions to problems. i say what do you want the outcome to be, and how we get there? business and society collaborating together. have theome businesses finest institutions in the planet. even in the crisis, we do not need government help. we were trying to help people. i really want to make sure we over do our jobs in helping grow and the economy get better. francine: i spoke to a lot of

european banking ceos in the you weeks who are terrified are not a little a anymore with europe. there has been criticism about basel, and some are legitimate. at the end of the day, they will work out things with basel that makes sense with everybody. we don't want in a level playing field -- an unlevel playing field. i want the european banks to thrive. if they do not, you are will not thrive. to me, regulators should look at things that will help the european banks compete and thrive to grow their economies. much more important in europe than the u.s. the banks only pay is 25% here. francine: what are the chances of the u.s. ignoring the direct regulation. are you certain they will reach an agreement? jamie: the u.s. goldplated

possible, made it harder-- basel, made it harder. breathbasel takes a deep and the next round is probably calibrated to enhance growth. they should be looking at both, not just one. francine: smarter regulation? jamie: not more or less, just smarter. if you look at the u.s., mortgage would have a happy trillion dollars more if we , harpers.les a lot of banks went out of mortgages. small business formation is slower. first time ever for a net come recovery.y -- net a lot of banks got out on the lot of small business. there are always unintended

consequences to regulations. what are the unintended ones? certain it is to hold small business and real estate loans. francine: how do you rate the european banking system at the moment? we have tried to fix italian banks. i don't know if you think it is successful or not. are we over the worst? jamie: we knew it was hard. we could have gotten it done. 40 billion in bad loans. so much has been written off. five or 6 billion new capital will fix the problem. days,of all, in the old because of the crisis and new rules they have been going back. the right way was pan-european regulator. is better, more diversified.

i don't know what the long run is. eventually, you see emerging acquisitions among banks again. francine: the problem is that -- jamie: regulators. regulators have to say what they actually want and allow it. if they do not allow you to use capital in this country to support capital, anything done across border is heavily soished, it will not happen anything cross-border is bad. they want to reduce it. reduce it substantially. we have no choice. i want to see the european banks thrive. francine: because this is good for your competition or just stability? jamie: for the citizens of europe, including the low paid ones. i think people don't look at this clearly. constant beating up on banks.

they cannot finance growth so you will have other people come in and do it, with some of the investors are buying assets out of european banks, but their job is to help grow the economy. francine: to all of our viewers across radio and to our listeners across radio, we have jamie dimon. talk to me a little bit about brexit. give me the number of job losses you are expecting. jamie: obsessed with job losses. has to be, jp morgan able to conduct business with our clients in europe. those clients include governments, hospitals, businesses, individuals, etc. to do that, we have to meet the new laws. we will have to anticipate some and build up structures.we will be ready . is doing a good job for the client.

be zero to will three or 4000 and we do not know. happens in day one is different than what you will be asked to do. the british people have decided. the politicians have decided. we have accommodated. what no one wants this to disrupt financial markets on day one so you cannot finance pennies. that can be devastating. financeance -- can't companies. that can be devastating. we are just guessing. francine: is it a phaseout? jamie: we are just guessing at this point. the only thing i know is that on day one we have to be about to conduct business in europe legal entities and requirements and certain expertise.

francine: are you jamie: we talk to each other on how to handle it. in london the clustering in london is usually efficient for all of your. now you have a de-clustering. we have no choice. that is what we have to do and try to figure out the best way to do it for the client for the short run in the long run. francine: the government preserves the financial sector? jamie: i don't know. she has to negotiate with 27 other people. no one wants to see disruption. so want to punish britain, others are much more rational and thoughtful about how to go about it. i don't know. i have to prepare for contingencies. if you are any viewers are on the board of directors, you would think a, b, c.

you have to be prepared for a, b, c. you guys mention all the major cities. we will look at all and talk to people and try to figure out and looking in detail and much more cities. francine: what will the bank look like in five years? you were talking about the strength of the financial system . is the euro going to -- jamie: highly say the european union is one of the great achievements of mankind ever. nations hold hands and make political decisions and not wars and having a common market, those are smart and got bogged down a little bit. the british thought it was too much. there are issues we dealt with. when you are talking to the politicians, they are devoted to moving forward.

ionre should be more devot about solving problems. majorrst case is someone the side -- the sides to leave the monetary union and that is a huge disruption. no one says they are going to do that. their people running the savior going to do it. yet a look at the politics of the situation. francine: how do politicians recognize -- with the people electing them? jamie: it's true in europe and the united states. middle-class incomes are not gone up. low wages have not gone up. there is too much unemployment. young men in europe. they saw us fight wars, waste money. they are saying let's help the average people of our country. the next part is how you do that? good tax policy.

good training skills, schools. francine: redistribution of wealth? jamie: the art income tax credit where if you earn seven dollars an hour, the government will pay three. $15,000 a year to $21,000. now we help jobs, dignity. studies show that people like the work -- unlike with the liberal thing, the first rung in adder.tter is -- l it is good for small business. that is great for society. i think we have to come up with examples of actually fixing the problems. skills training is another one. germany does a great. francine: we get involved in politics? jamie: i'm not suited for politics. i'm 61 years old, i love my company. thank you so much are

giving us so much of your time. we are in paris at the 2017 global markets conference. jamie: thank you, enjoyed it. jonathan: thank you very much. research managing director christie hopper of bloomberg news, continuing the conversation. sevenn't until question about the present. say you believe that the number one issue of this administration for the crisis of bank stocks? when i talked to investors in the rationales they get for buying bank stocks, the first is the flow argument. towent from underweight maybe equally but we are not overweight. the second is what i call a concept rocket. that gets to what your question is. we will have tax reform. we will get deregulation, progrowth policies.

the third argument is things are cheap on earnings. i have issues with the 20 those buck -- each one of those buckets. david: financial stocks ramp up dramatically after the election. even today they report that congress is backing a little bit. we will not is of dodd-frank and things like that. is that reflected in the bank stocks? a little bit of hesitation in washington on deregulation? charles: it is not regulated in the sense they retained their -- that is the concept bucket. we are going to get tax reform, the regulation, infrastructure spending. i think if you look at the hard data -- it's interesting. jamie dimon kept trying to talk about rising confidence and policy, but not hard data. thatn't see hard data get says financial activity or economic activity is accelerating.

that is what these bank stocks are up on, the extortion of activity. alix: are you interested in european banks? we have to make them healthy. they are dealing with all the loans in europe. that was surprising for a ceo. yes, but whenhand you see the almost crisis-like situation that was developing last year around deutsche bank, that was not helping any bank stock. there was a real concern because some of those banks are very interconnected. if any get into serious trouble, it will hurt the whole sector. is a lot of reason for jamie dimon to the european sector to get healthy. it will be good for the economy and for his business ultimately. a position now where you can argue he is the world's most powerful banker. he is outside of the central banks. made almostsn't a $100 billion in revenue last year. the stock prices and all-time high. things are pretty good.

you heard an incredibly optimistic view and a time of what i would say is still a lot of uncertainty about what is happening. things are more likely to get better than they are to get worse. now that is priced into it and agree. whether they are able to actually build on the fromtum through actions the administration and what happens in the european elections, or if there are any disappointments that can lead to what charlie was saying. jonathan: let's listen to what's informing that optimism. jamie: whether the policy, the tweets. theprofessionals in military, defense secretary of state, secretary of the treasury. gary:. y cohn. their mission is have a growth agenda to reduce corporate taxes, build infrastructure, producing regulatory regimes that are

holding things back. i think it's good for all americans. jonathan: sharing the optimism that bank investors share. what is the risk that meant we don't get this kind of action from the administration? and the narrative just changes to support the bullish valuation. i see that a lot. more to more people look of november 9 and said the rally is because of a, b, c. and when i thought we might not get the good stuff, they said it started back in june. it reinforces the confirmation that is balled up an buying equities. charlie: if you look at the base metals, basically the pete in november, december and having going sideways since. if you believe the never -- inure spending infrastructure spending, they are starting to roll over. me you bought into the x

etf, you are lower now than january 1. i can tell you with absolute confidence that is no room for deterioration in credit quality. there is an assumption of a benign capital markets environment even though we are transitioning from potentially monetary tightening to fiscal stimulus. that transition will not be smooth in my mind. i'm having trouble with these numbers that are out there. david: if he had your network tied up in bank stocks right now, if you had it, would you care more about if they deliver on deregulation in washington or more about what the fed does with rate hikes? charlie: i think with the fed does is very important. they typically cycle and when there's a military policy mistake -- monetary policy mistake. quietly hiking rates right now? is because of inflation or animal spirits or because we have a window of opportunity or because economic growth is accelerating?

three of those four are not positive reasons to hike. -- fourth is lacking in the david: which one would you care about more? charlie: monetary policy. david: how much of a baking is a big earnings forecast real deregulation out of washington? christine: i don't think it is actually baked in. what is being baked and is this outlook for a higher interest rate environment and a lot of cost-cutting. mentioned is jamie dimon is aggressive in their business. they are looking at it for more efficient models going forward. if you have brevity that grows, even if is not superfast that's a good opportunity for them. i think that's the kind of hope and generally when you have uncertainty there is a negative spin on it. people don't like uncertainty.

in this case there is uncertainty, over what is certain is he will not give more regulation. i think that is making people very happy. charlie: to me it's not a cost-reduction story for the big banks. is more of an opportunity to take advantage of greater economic activity. that is the threat behind all these arguments. you need accelerating economic activity to justify prices right now. you may get it but we don't see it yet. david: will that equal taking on more risk for the banks? charlie: we are definitely seeing that. you are seeing a big ramp-up in subprime lending by the seven largest card issuers. alix: illustrate that valuation. if you take a look the bloomberg, the s&p financials versus the tenure yield. -- 10 year yield. this was lovely back in 2008 when the yield was up about 4%. now we europe about 2.5% -- now

we are about 2.5%. case thatys there's a they have a steady revenue if you have regulation coming off. valuations are still cheap. charlie: they are cheap if you believe the credit cycle will be repealed, which i don't. i get a risk adjustment assessment of 2018 earnings. i think it to a 60% r.o.e. for jpmorgan and $60 book value, for that justifies a $95 target price and the stock is at $92 today. i just i'll see a lot of umph given the uncertainties are now. david: another kind of costs is babylon write-offs. when you're on the credit cycle when you are concerned about underestimating writing up bad loans. charlie: when you look at consensus estimates for 2018,

it's going to be exactly what it is today. a year what was in 2007, before the financial crisis hit. there is no assessment of any credit deterioration in those numbers. alix: breaking news in terms of aig. and chief executive officer will be resigning. a 15% of his tenure. he got the job in 2014. out offfered losses four the last six quarters. investors have also been applying pressure to aig. hancock will remain ceo until a successor is named. interesting to follow that. the stop living much higher in pre-markets. christine: is interesting in light of the fact that a lot of people have been optimistic under the trump regime that maybe some of the rules run aig could be loosened. they were the opportunity for them to see a brighter future. that was a concern.

obviously they have been putting pressure on hancock. the last earnings were not as good as people were hoping. i will look more do what they are saying but it's not a complete surprise that they are leaving. jonathan: special thanks to charles peabody and christine harper. you heard from one of the big voices in finance, we get to another one. president draghi. full coverage of the ecb news city, 16from new york minutes. you are watching bloomberg.

♪ focused ony we are the ecb decision and the upcoming draghi news conference. tomorrow we shift the u.s. policy and the potential effect

from february's payrolls. cameron walked is blackrock's senior -- investment institute senior director. you if iart with could. as you look at these possible payroll numbers and effects on the fed and ultimately on fx, what you projecting for tomorrow? expect close it a 230 gains and payroll which is above the market consensus. drivinging i think the factor behind the fx markets tomorrow will be the indication of wage growth accelerating. it is the case the fed has said time and time again. i made headlines could be as low as 120 or 150,000.

evidence that the labor market is indeed producing wage inflation. if that is confirmed, market expectations for earnings are close to 2.8% annualized. you could get a stronger print. that would be a strong that it would be more on the hawkish side. david: specifically on the wage increase that balentine referred to? ne some did alenti pretty well. more setting the timetable and paten from th march onward. we expection numbers, those to pick up because the labor market is tightening. that lies by the decision to accelerate. what are weine,

going to see for the dollar to make another way higher? tine: i was just referring to anything over those numbers on the wage growth. as i was saying, the headline payrolls of these levels. on employment losing their -- unemployment losing their importance. the market is been performing around the payrolls. it has been increasingly underperforming without realizing it the headline print, losing it's important. all eyes will be on the which growth tomorrow. alix: that really speaks to a march rate hike in the immediacy. i'm confirmed for the long-term perspective of the fed and what that means for the dollar. what we need to see the it more hikes for 2018 on the table? valentine: when it comes to what could drive forward guidance, what could make it more hawkish next week is indeed evidence the labor market is finally

generating meaningful gains in wages. any indication of that could actually make the fed more confident that more hikes could be needed down the road. that is the evidence for me. jonathan: given the flashpoint in the market in general, back up to 256. if you loaded up in the equity market and yields backed up to 256 in the bond market, how significant is that level to you? totally insignificant, jonathan. we are really still in the early stages of this general bond sell down. financial conditions have not tightened anywhere near enough to make one concerned about equity. i think we are in the sweet spot with the economy slowly accelerating and corporate earnings beginning to come through. watt, bothcameron

the you guys are sticking with us. we are waiting mario draghi's news conference. following that closely. this is bloomberg. ♪

♪ jonathan: from new york city, with all eyes on frankfurt in about seven minutes time. this is bloomberg. let's get you up to speed on the markets. features just a little down after a three-day slide on the s&p 500. %.gative by 0.11 ahead of the ecb does conference the euro looks a little something like this. up by 1/10 of 1%. strong the tvy qegram unchanged -- program unchanged.

i want to start with the ecb statement some people thought might change and didn't. saying rates would say a present or low levels for an extended period. a, do you still buy that line and b, do you think it will change it? ewen: they can change of it they will change it later in the year with evidence about this continuing pickup and european activity. they will not jump ahead of that. b, i'm not surprised because we see central-bank policy. the fed, some would say it's behind the curve. central-bank stomata rise to early. they are prepared with the economies run hotter for a while before they take the punch bowl away. jonathan: you are happy the ecb will remain patient or do you not sure the optimism that maybe some market participants have for you the european economy? en: i think the market is not

pricing in the right level of european growth. at market should be pricing 1.5 or maybe higher. in the second is pricing at about 1. i guess that is just skepticism about the politics, maybe about how sustainable this could be. i expect the president will say so about the european economy improving. pmi is that a six-year high. he will remind us that core inflation is still extremely low and there is still a substantial output gap in europe. david: don't we know are this is ending up? this is a question of when they tell us. mario draghi will run out of bonds to buy at some point sometime next year. when do we start gradually taking the punch bowl away? ntine: any such medication can come as early as september after we've been through the

dutch and french presidential elections. in the coming months, not before that. expectations are indeed they have to reduce the pace of the government bond purchases. that try to compensate for drop of purchasing additional options, but it's still too early to assess that. they could become a theme for the markets in the second half of this year focusing on the september now. it does seem that any indication on paper can play out positive across the board. alix: take a look at crude, off by 1% today. a lot of the hawkish rhetoric coming into the meeting was that headline inflation was around 2%. mario draghi of the last conference stressed that was temporary and focused. the today prove him right? ewen" i think it does.

ecb is quietly pleased with the with the anchored inflation. they will keep on with their message of core inflation. the stretch comes around the political calendar later in the will startermany pressing a little bit about not wanting negative rates for german sailors. i think that's where you see the pressure starting to rise. draghi willthink reiterate what he said at the last conference. cannot be transient. the germans continue to complain and look at where inflation rates are still low. it's around 1.4 percentage point. i want to get your thought on the single currency, the euro. we are at $1.05. the parity calls. are those guys whistling in the wind? risk, especially

going into the elections in the netherlands next week and the french presidential election. polls are not always to believed. some caution is indeed warranted. we have analysis are the potential outcome score, the different scenarios. according to those analysis, the result is a significant euro downsize in the event of antiestablishment parties winning in either the netherlands or france. given the significance of the downside, talking about things like a percent or 9% downsize. downsize.% our central case is for the mainstream party to wage in power -- remain in power on both fronts. we don't have parity in our projections but it is a risk from the current standpoint. watt, valewen camera

entine, thank you very much. ahead of a news conference with ecb president mario draghi coming up eminently, futures a little softer. down by 1/10 of 1%. % after a three-day losing streak. it has been up while since we've seen three is a losses together. ahead of the ecb, we look like this. treasuries, yields declining for eight straight days. will he make it nine? 259 on a u.s. 10 year. the cable rate climbs to 12123. the fx market, the euro clients by 1/10 of 1%. it is a marginally softer dollars story out of an ecb decision . a little later we'll get the news conference. race remains unchanged at 0%.

0.25% on a marginal ending for 2013. the question for many people is this line. rates will stay present or level levels for an extended period of time and will pass the horizon that access purchases. i imagine there will be a conversation about it. >> there are two conversations. one is for extended time or longer. that would have been a more hawkish move. tro.also tell jonathan: the question is will they end the program. alix: i want to take a look at some data breaking in the u.s. 243,000. we are still around historical lows. i am focused on the import price index. and for prices -- import prices

up. january revised higher as well. petroleum of 3/10 of a percent. . pivotal for the headline inflation. january revised higher as well. the reason to question the potential overshoot we will see in headline numbers. jonathan: let's talk to a significant difference in the u.s. economy in the european economy. what they have economy is headline inflation. they are doing good thing. the difference is the amount of flak in either economy. jobless claims come out at 243,000. as an incredibly tight labor market. if you go on the headline numbers, you want have that to be right now. unicredit to europe is to complete the -- you look at europe and it's a complete the different situation. david: in a planet numbers are much better in europe than in

some time, one of the questions for me is doing much stock there is the u.s. economy? experts were saying job numbers are going to come down. these numbers will come down. they have to because we are close to saturation alix: mario draghi dealing with germany. there is still different numbers coming in. jonathan: there was no debate over the unemployment situation in the south of europe. i think they are radically different. the stage is set for president draghi at a news conference in frankfurt, germany. rates monetary policy, unchanged at 0%. at -40 basisate points. the line from the statement, we can cross over to frankfurt, germany.

the european central bank headquarters with mario draghi to listen in on the comments and this morning news conference. let's take a listen. >> ladies in human, the vice president and i are pleased to welcome you to our press conference to now report on the item of today's meeting of the council. based on our regular economic and monetary analysis, we decided to keep the key ecb interest rates unchanged. we continue to expect them to remain at present or lower levels for an extended period of time. and well past the horizons of our purchases. regarding nonstandard monetary policy measures, we confirm we will continue to make purchases under the asset purchase program

that the current monthly pace of 80 billion euros until the end of this month. 2017 arefrom april asset purchases are intended to continue at about the pace of 60 the end ofos until there is any case for the governing council sees sustained adjustment consistent with inflation aims. the net purchases will be made alongside reinvestment of the principal maintenance thrown much maturing. monetary measures -- monetary policy measures have continued to preserve the very favorable financing conditions that are

necessary to secure a sustained convergence of inflation rates to what is level below for what us posted 2% or the medium-term. their ongoing past three to the boring conditions for firms and how those that this credit creation and supports the steadily firming recovery of the euro area economy. sentiment indicators suggest that the cyclical recovery may be gaining momentum. increased,as again largely on account of rising energy and food price inflation. however underlining inflation pressures continue to remain subdued. the governing council will continue to look through changes

in inflation is judged to be having no application for the medium tallow for price's abilities. degree ofstantial monetary accommodation is still needed for underlining inflation pressures to build up and support headline inflation in the medium-term. if the outlook becomes less favorable, or if financial conditions become inconsistent with further progress, towards a sustained adjustment on the path of inflation. we stand ready to increase our asset purchase program in terms of size and duration. let me now explain. starting with the economic analysis. 0.4%area gdp increased by

quarter on quarter. in the fourth quarter of 2016. following a similar pace of growth in the third quarter. incoming data notably serving the results increase our confidence the ongoing economic expansion will continue to form and brought. the pass-through of the monetary policy measures, it is supported domestic demand and facilitates the ongoing deleveraging process. they were covering investment continues to be promoted by very favorable financing conditions and improvements in corporate profitability. employment,sing which is also benefiting from past structural reforms, is

having a positive impact on how wholesales wield this formal incomem therefore surviving support for private consumption. also there are signs of somewhat stronger global recovery and increasing global trade. however, economic growth in the euro area is expected to be dampened by the sluggish pace of implementation of structural reforms and remaining balance sheet adjustment needs and a number of sectors. it widely affected marseille 17 microeconomic projections for the euro area. tp by 1.8%ees annual by 1.7% in 2018 and buy one for 6% in 2019.

december, 2016he , theean system stuff outlook for real gdp growth has been revised upwards, likely in 2017 and 2018. the risk serenity euro area outlook have become less from announced. but they remain tilted to the rely privately unto global factors. according to euro staff estimates, euro area annual inflation increased further to 2% in february, up from one point percent in january 2017, and 1.1% in december 2016. reflected mainly a strong

increase in annual energy and unprocessed food person inflation. with no sign set of a convincing upward trend underlying inflation. headline inflation is like of the that's likely to remain levels close to 2% in the coming months. largely reflecting movements in the annual rate of change of energy prices. of underlying inflation have remained low and are expected to rise only gradually over the medium-term. supported by the monetary policy in -- andthe expenses the corresponding gradual absorption of slack. this pattern is also reflected -- which were see

inual inflation at 1.7% 2017, 1.6% in 2018, and 1.7% in 2019. the december put 2016 euro systems microeconomic projections, the outlook for inflation has been revised upward significantly for 2017 and is likely for 2018. fore remaining unchanged 2019. the staff projections are conditional on the fool of limitation of all our policy measures. turning to the monetary analysis at aontinues to expand

robust pace. with an annual rate of growth of 2017, after five cents in december 2016. as in previous months, growth and three was mainly supported by its most the liquid components with a narrow monetary aggregate and expanding at an annual rate of 8.4% in decemberafter a 20% in 2016. for the path of gradual recovery observed since the beginning of 2014. the annual growth rate of loans to low financial corporations was 2.3% in january 2017, as in the previous months. was 2.2%l growth rate

in january 2017, after 2% in december 2016. although developments and bank credit continue to reflect the lag relationship with the business cycle, credit risk and financial sector balance sheets. the monetary policy measures put in place since june 2014 are significantly supporting borrowing conditions for firms and households. and it right credit flows across the euro area. up, crosschecked of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for a continued very substantial degree of monetary accommodation to secure a

sustained return on inflation s that are below but close to 2% without undue delay. a noted to rip the full benefits from the monetary policy measures, other policy areas must contribute much more of the for economic growth. structural reforms need to be substantially stepped up to increase resilience, reduce structural unemployment, and boost potential output growth. against the background of overruled limited implementation of country specifically in 2016. greater reform effort is necessary in all euro countries in 2017. regarding fiscal policies more countries showed an intensified

effort towards achieving a more growth friendly composition of public finances. after link consistent implementation of the stability -- and acrosst countries remains crucial to ensure confidence in the eu's governance framework. we are now at your disposal for questions. >> mr. president, in january you theined for criteria for sustained adjustment part of inflation/

could you give us some progress report about how feel you take you are in fulfilling each of those? that has also been a debate about introducing it is more change to the forward guidance ever boring -- removing the clause that says you are ready to lower the rate if needed. if i'm not mistaken, could you explain to us why there has been a debate on this passage? thank you. you the substance of the discussion we had at the castle. i will also answer your points. built on three blocks. the first one is the acknowledgment of success. namely monetary policy has been successful.

let me be just a few numbers. of why we say that and how we measure it, this success. since 2015 real gdp growth has 0.3 andady, between 0.6% quarter on quarter. in economic sentiment index february is the highest since 2011. the pmi component -- composite outlook index in february 2017 is the highest since april 2011. the unemployment rate in january was 9.6% that's the lowest since may 2009. employment-wise, in the last

three years 4 million jobs are being created. it is more than that because there has been a revision and the number of employment figures in germany in recent. so it's more than 4 million. incidentally, in just giving you these numbers about employment let me ask you had doubts about the equity of areasset purchase program being answered because the most equitable measure of all is to create employment. into degrees unemployment. furthervery broadened in the last quarter last year. across sectors and across countries. the interesting thing which is continuing, and i think a remark about this last time, is the dispersion of value added growth

across countries reached an all-time low. country seem to grow more together. an all-time low sees 1997. move to inflation, the --k of deflation have argued have largely disappeared. , longer-term horizons. even though they are still below the level that is considered to be adequate for pronouncing victory on the inflation front. the financing conditions that credit demands have continued to improve. rates, households and companies have declined significantly. by more than our key interest rates.

the cross-country but we had fragmentation, we had countries when the lower interest rates were not passed 2. now it materially is decreased. low rates in italy and spain of begun more than in germany and france. the boring conditions for sme heavy crude and the firm's demand for loans has increased considerably. nfcalso important the leverage has gone down quite significantly. money give you a final estimate on the impact of policy -- monetary policy measures in the three years between 2016 and 2019. the accumulative impact of policy measures is 1.7% on

bylation, additional created policy measures. and 1.7% on growth. assessmentically the that inspired the intervention of councilmembers. the second block was the one you itt heard the saying you got -- namely the appropriateness of the present monetary policy stance upon which these projections are based. information,ent the monetary policy stance i just read in an introductory statement is considered appropriate by the council. the third block was a discussion about risks, the economic

situation. how it has evolved. there was a general recognition that the balance of risk has improved, as far as growth is concerned. it is quite clear the assessment that were scenarios considered very likely before is now telling us this will become less likely. that has no consequences in our language. there was a sentence that was removed from my introductory statement that used to say if warranted to achieve its .bjectives by using all available in its mandate.

that is being removed. that has been removed because it's a signal that there is no longer a sense of urgency in taking further actions while maintaining monetary policy stance, including forward guidance. but that urgency that was prompted by the risk of deflation is not there. that was the judgment an assessment of the governing council. in which iissue would like to draw your attention is that, as you know, -the list will expire. there was no discussion about having another teltro, not at all. had a cursory discussion of whether to remove the lord

"-- the word from ford and guidance -- 2016, from march today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate it will be necessary to reduce rates further. course, new facts can change the situation and the outlook. since then, we frankly never discussed. we had an exchange on that. just to emphasize it is not a dramatic choice whether to keep or remove it. in the end, the governing council given the fact we can't say we are there with a sub -- self-sustaining inflation rate, prefer to keep this option in

the language. we will continue to look through changes in inflation to the and wethey are transient do not have implications for medium-term outlook for price stability. thank you. thank you very much. i want to follow up on the tlto you mentioned. you mentioned there was no discussion about a new tlto. can you elaborate on this a little more? there was so much noise about it before this meeting. completely offw the table or is it just you put it back and see what is going on and perhaps in the next few months it could happen, or will

-- hetapering from the could safeguard liquidity in the future. the second question, more broader, if you look at the markets, they are rising again. more and more market for dissidents. the market will start betting against the eurozone. how want to deal with the situation given the fact that many important political aspects on the way forward this year. thank you. mario draghi: on the first question, your remark was not discussed at a sign of improved climate. there was number of the voting council that felt the need to even mention this. having said that, we in the spirit of the ford guidance --

forward guidance and he could be used if the economic situation would warrant that. ideological or institutional or legal obstacles to that. point, frankly i don't see that. they are tensions but not that serious. we are ready. the euro is revocable. most of my words -- we can discuss it further -- should be experienceent -- the by the euro. barometer, more % of people in that area are in favor of maintaining the euro and the percentage has increased.

three countries joined the euro in the midst of the crisis. the euro is perceived as being bp requisite of the single prerequisite of the single market. countries, no matter what their views are, greatly benefited from the single market. all this speaks in favor of an 2012 of looking at these developments with great attention, but know exactly -- no anxiety. draghi,ru -- mr. my impression is you are not convinced. what will we need to see before you have this sort of high-class problem in which you would be

willing to drop the commitment to further easing? is that a case where we were need to see more of a social balance risk or more specifically at the four criteria you listed for inflation? i second question, there seems to be a lot of speculation that you could raise rates before the end of qe, which clearly contradictory opening statements. yet the speculation seems to exist. tot are the possible for you clarify a big see any circumstances under which you would raise before ending bond buying? thank you. >> i simply reported on the discussion. left or one has to onerstand th -- based understanding is a gradual process.

the voting council members want to be convinced they actually see a self sustained adjustment in inflation rates. we don't see it yet. i said it in a directory statement. there are no convincing signs -- where is it? there are no convincing signs inflation.rlying the projections show this. progress on the recovery here. no signs yet of convincing upward trend in underlying inflation. so at the same time the projections are conditional on the full implementation of the

monetary policy measures that i ave just read about. it's a gradual process. we have acknowledged the progress on the growth front, and we ecovery front, are pretty confident that as this proceeds, the labor market conditions will improve and we'll start seeing that wages growth, which is the lynch pin . a self-sustained growth variable we ey should look at. it is not the only one but it is key. it's not that one is convinced or unconvinced all of a sudden. we have to -- we are progressing toward that objective. we are confident we are progressing and we can actually

see the success of our decisions through the numbers i've just given you, on growth, on employment, trade markets, financing, inflation expectations. thank you. the other point, i don't want to speculate. e forward guidance now and based on current information, that's what it is. it says that until -- the interest rates will continue on the monthly pace or beyond if interest nd the ates --.

yeah. base on the regular monetary -- we decided to keep the key e.c.b. interest rates unchanged. we continue to expect them to remain at present or lower levels for an extended period of time. so it's an expectation. we expect them to remain at present or lower levels. as i said, the ex-pegget petkeation, the probability of an expectation that will actually materialize into lower level has gone down, given what i just said about the rest, the progress we've made. but the council decided to keep this guidance exactly as it stood before. thank you. >> thank you. "wall street journal." i had a question about the

agreement within the governing council. would you say there is more consensus today going out or continuing with the stimulus than there was a couple years ago when you were going into the q.e. program? because some, you know, some council members expressed a doubt about what the current level of stimulus is too strong. my second question is on trade substances. the new u.s. administration has expressed concern about surpluses in germany and for europe as a whole. do you think there is any merit in such criticism? does -- does it reflect some kind of imbalance that could have negative effects globally or for the euro zone? thanks. mr. draghi: let me respond to the second question first. i don't think there is any . rit in attacking germany

by the way, i have addressed the same question two or three weeks ago. the currency of germany is the euro. and the euro has monetary policies conducted by e.c.b. e.c.b. is independent. as laid down in the european treaties and the statute. the exchange rate of the euro is determined by market forces, which is consistent with the long standing commitment of the international community to market determined exchanged rates. as reiterated both at g-7 and g-20 forum. in its latest report to congress, released on october , 2016, the u.s. treasury, itself, stressed that germany does not manipulate the urrency.

the quotes, "treasury has found in its support that no economy satisfies the criteria --" including germany. "for being called a currency manipulator." second quote. "germany has both a significant bilateral trade surplus with the united states and a current account surplus well above the material threshold. but the european central bank has not intervened in foreign currency since 2011. " and when we did it we did it as part of a concerted intervention to stabilize the yen following japan's earthquake and the tsunami. so that is the, i think the . swer to your point i can continue. by the way, if we look at where the effective exchange rate stands today with respect to historic leverage we don't see especially that the euro is off

the historical average, but the exchange rate of the dollar is off the historical average, so it means it is not the euro that is the culprit for this situation. now, your first question, you're asking me how the consensus changes from time to time and meeting to meeting. actually don't have a meter to measure that. the discussion today was pretty substantial. each position will state, by and large i think i gave you a fair account of what was discussed. your answers might have been different. but i don't think -- i'm not able to compare the degree of consensus today with the degree of consensus last time. you're asking an even more difficult question. you're asking me to remember what the consensus was a year, three years ago. that is the bar is too high for e.

>> mr. daniels? >> thank you. first the force from european leaders. w has the e.c.b. handled europe as we've heard from chancellor merkel of late and secondly just the trade-off. we've seen some disportions especially in the german market over the last three weeks at the shortened. i just wondered how the e.c.b. would react to that. mr. draghi: well, on the first point i really don't have much to say. it's an entirely wholly political judgment here. there is clearly the need to work more together, because the nature of the problems that have presented to the european

countries are all of that, i would say, super national problems so they can be successfully caught only together. now, given that the political situations in different may ries are different, it well happen that countries are not equally ready to move together toward working together. so i guess that's where the from. ce to europe comes the acknowledgment that a certain group of countries either because they perceive their problems are more closer entity or because they are more ready to work together are more prepared than others to do this. so my understanding of this is whatever arrangement could be found, it is unclear yet which

specific area would be addressed by this arrangement. whatever arrangement could be found is going to be an open arrangement, namely ready to welcome any other country that would like to join. i don't know enough about the spess fis its of this statement -- i don't know enough about the specificity of this statement to know more than that. perhaps i will know more tonight. on the other point, about distortions in the german market. yes, we have observed and are monitoring that quite closely. we asked ourselves what could be the reasons, the causes for this, for this interest rate movement? we are in quite the preliminary stage of our analysis, so what i'm going to say today is very provisional. there are several causes. e is that the german shorten

bonds or generally the german bond market is viewed as a safe haven. so it flows toward this market and it has been what we call flight-to-quality phenomenon, as well. but if we limit our attention to the short-term segment, on top of that, we see that the german short-term bonds are equivalent to putting money in he deposit facility. so the share of those who don't have access to the deposit facility go in german short-term bonds and this share of people has gone up. that's why we have low yields in the cash bond market on the short term but not in the repo market because investors are different. and the other cause, of course,

is our purchase program. but to assess the well to wait is too early. the first two calls seem to be pret -- the first two causes seem to be pretty relevant and significant. perhaps more significant than the asset purchase program. but just perhaps we want to come back on this next time to ave a definite view on that. >> i'm from japanese nikkei. i have two questions. one question is about the economic outlook and growth and inflation. what about the fragile relationship or the coming election in the euro zone? the second question is, again, about the currency manipulations discussion, and g-20 meeting, it

will be held next week in germany. what kind of discussion are you expecting? are you expecting any changes of g-20 commitments or consensus in terms of exchange rate or banking regulations? thank you. mr. draghi: well, thank you. -- in our introductory statement there is a reference to geo global race but i'm saying this because that is really an irrelevant risk source that we've taken into account in our discussion. if one wants to sort of assess the balance of risk as it has been evolving over the past say five, six months, we would say the domestic sources of risk have been more contained.

the importance of domestic risk has decreased. the geo political global risk share of importance, if nything, has gone out. that is a fair assessment, though we have to be very, very careful about this assessment because our experience in the last year and a half has been that we were expecting some significant economic impact from the various risks that had been materialized, and you remember the brexit. you remember the italian referendum. you remember the new u.s. administration. now we have the elections in europe. now, these risks, some of them have materialized, but we haven't seen yet a significant economic impact. so we are all asking ourselves

when -- there are certain events, and i don't want to point out which ones will produce in the medium term a negative cause. but so far, almost a year and a half has passed from the british referendum and we, about i'm not sure -- eight months? nine months? yes. a haven't seen yet consequence. so we have to be sort of -- we know these are risk events. we don't know how these risk events will reverberate on the eek ig -- economic situation. on the second question, well, i think it's important to iterate the commitments that re undertaken by our leaders

and finance ministers. the last one was on july 24, 2016. by the g-20 finance ministers, central bank governors. we reiterate that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. we will consult closely on exchange markets. we reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes. now, a statement like this or statements to this extent, have been the piller of the stability that has accompanied world growth in the last 20 years and longer. so it's very important that

this commitment -- commitments of this type are being eaffirmed. >> thank you. for dutch newspaper news blog. mr. draghi, can i ask, has the governing council to date discussed an exit from the qe program, and in line with that, has the governing council discussed the language in the statement saying we stand ready to increase our assets purchase program in terms of size and/or duration? thank you. mr. draghi: no. we haven't discussed either, either point. but by and large, if i can

repeat what i said before, the original formulation of the former guidance maintained a certain amount of flexibility just in case certain very negative scenarios were to materialize. from today's perspective, based on information we have today, these scenarios have become ore unlikely to materialize. thank you. >> chuck ewing, "new york times." mr. draghi, there was some discussion of the political situation a few minutes ago. i wonder if i could come back to that. a number of elections are coming up this year. the number of -- in most of the countries there is a candidate who is anti-euro or euro skeptic. it sounded a minute ago like you were pretty relaxed about that. am i reading you right? or is this something that you're worried about? does it play any role in your

discussions? and, secondly, on the g-20 i just wonder, am i correct this will be your first meeting with any members of the new u.s. administration? i'm just wondering if you have ny agenda or message for them. mr. draghi: thank you. you are correct. no, not really. mean, just our mandate is relatively narrow if compared to the broadness of the issues that are going to be discussed about the finance ministers. we operate. we work. and we craft our international our on based on pursuing monetary price stability. even in international fall out we look at what conditions internationally are supportive of price stability. so i don't have any message at

this point in time. be confident this will fruitful. on your first point, let me be clear. if we go back to when the euro was created, there were people who said, it's wrong. it's a mistake. cannot be done. those still e been saying the same during the life of the euro and saying the same today. i find this position, and that will tell you in which way i'm concerned. in other words, not so much by the market developments, which i said before we look and monitor with attention but without anxiety, but in a different way the euro, i was saying before, as being the cornerstone, the piller upon

which the single market could survive and could prosper and could increase prosperity of the member countries, so without single market, there is no european union. that's why it's unrealistic to think anything different from the euro. and now, especially now, that we face all european countries face geo political challenges -- terrorists, migration, security challenges, the euro is a channel for solidarity across some of its members. and the leaders have expressed their clear intention to work together. i recall before even in the midst of a crisis, three countries, astonia, latvia, lithuania, joined the euro. that was of course because of the direct benefits such

membership could bring, but also because of a sense of solidarity that such membership would entail. so to cut it short, the euro is here to stay. so the question is not so much if it's revokeable. it is. but then a more productive line of thinking would be, how do we that we can increase prosperity. make it function better, this monetary union. and in the course of its history, you can see that many things have been done. we tend to always, when facing critical moments, we tend to underplay our achievements in the past. but, in fact, if you look at the growth, but if you looked at the s.s.m., look at the e.s.m., if you look at the extraordinary shows of solidarity that countries have shown toward its members that

were being in a state of crisis, and on the other side you can also recall the extraordinary efforts of the ountries that were in -- all of this tells us that the commitment of the european and euro member countries' leaders to the euro is very, very , and so we should ask ourselves what can we do better to make the euro more resilient, stronger in facing a crisis? of course we've been, you know the way the e.c.b. thinks about that. but there are other rules. and i think that today more han ever the situation is open to further progress.

it's quite clear. it has to be made more resilient. everybody would agree with hat. >> i've got two questions. you know, you've pointed out yourself, earlier, that central bank has quite a narrow mandate but it seems to me that the statement to say that the euro is irrevokeable is quite a political statement. or do you consider it as part of your mandate to keep the currency union of the euro alive? that is the one question. my second question is it sounded like you're more optimistic on the economic outlook and i wonder why that is not reflected in your inflation forecast for 2019. thank you very much. mr. draghi: responding to the second question, we are more,

as you say, to use your words, more optimistic about the growth forecast. we have to see how the improved prospects as far as growth is concerned and strengthening and broadening of the recovery as i've said before translate into higher headline inflation into an inflation that satisfies the four features that were mentioned at the beginning. namely convergence to our objective of inflation rate, which is close but below 2% ch. that is a durable convergence in the medium term so not transient. that is self-sustained. in other words, a convergence that can stay there without this extraordinary monetary accommodation that's in place. and, of course, an inflation rate that is such for this objective for all countries and not one country only. we haven't seen yet how

these better prospects have translated. the reason we haven't seen it as i mentioned before is we haven't seen yet any significant development on the wages front. that is the key point. as i said, it's not the only point but it is one important element of our assessment. on the other point, you may imagine this question was asked of me at the time of the london peech in 2012. no. the mandate of the ecb stays what it is namely pursue price stability and to ensure that's going to be successful. not more than that. thank you. >> cnbc. may i bring you back to the g-20. how important is that for you that that will be a bold statement against protectionist

measures? because there are reports this -- from the y be communique. also the point which you made earlier there might be a dropping of the point of evaluation in the communique. how important is that that we'll see that for the community? and the other question is a bit more technical. there are also concerns that already by now there is not enough bonds to buy and for small countries like portugal, for example, how are you going to address that problem going forward during the course of this year, given we keep on having the asset purchase program around at the current speed? thank you. mr. draghi: our bond purchase program is on track both time wise and quantity wise. we have no reason to be worried about this at this point in

time. ow, the other point is actually quite important, is for -- i was commenting before on the commitments that were concerning the exchange rates. i think i can say the same about the commitments of keeping an open trade. they have been the pillers of world prosperity for many years, many decades. so it is quite important the g-20 reaffirm this commitment and, frankly, i don't know about these rumors. i know of the rumors but i don't know what to say about that, where they come from, whether they're true or not. >> this will close the press conference. thank you very much. > thank you. >> that wraps up the news conference in frankfurt, germany for the european central bank with president mario draghi. to capture some of the news,

monetary policy unchanged, rates unchanged, asset purchase program goes ahead, would drop to 60 billion euros a month from 80 next month. on the balance of risk, on growth it has improved according to president draghi. the reaction of the market follows. let's get straight to it and start with the euro. it's stronger on the session now just coming off session highs up through the dollar and six cents. we claim a 1.06, reclaim the 1.06, up 0.6%. the reaction of the bond market as follows. the 10-year bond, yields popped a little higher up. five basis points on the session to 0.42%. you listened to the man today. on the surface of things compared to the man he has been previously, somewhat hawkish maybe but when you listen to him talk about inflation and inflation dynamics, still thinks it's somewhat not transient as if you look at it and it is going to fall out once you get the basis becoming less favorable and can it be self-sustained? yes we increase our inflation forecast but you still increase the multi stim plus policy to

increase it. >> he went to great lengths to say the only reason we get to where we are is because of the monetary policy. there's no sense of urgency. >> from new york city as you hear the afternoon bell, here is the situation. futures a little softer. negative eight points on the dow. nowhere on the s&p 500. across the boards we look like this. bonds on offer, yields up two basis points to 2.58 on the u.s. 10-year. the euro story fueled by maybe on a margin a somewhat more hawkish strike. that takes the dollar a little lower. dollar index back to 101.83. by a quarter of 1%. >> opening up here, john, it is pretty much going nowhere fast. it is flat across the board. that means basically looking at three down days in a row. that was the first since the end of january. do we wind up getting a fourth? the s&p since march 1 the big move we had, had now given up all those gains.

now the s&p is marginally down for march. march is typically a really good month for stocks. this is kind of a standout. they were kind of grinding lower here. part of that has to do, of course, with the treasury market. 10-year yield up for a ninth day, just off a basis point to 57 on the 10-year. taking a look at drillers, they'll be the movers to watch as we head more into the session. lower across the board. trans ocean in particular off over 2%. we got an inventory build here in the u.s., plus you have dollar strain. on the flip side you got citi saying shell kap access is going to rise 80%. they're going to use more rigs. that should be good for the drillers but then more oil in the oil price. so this catch 22 in the oil market for prices as well as for the equities which brings me to, fasten your seat belt if crude keeps rolling over. this is crude prices the white line vs. s&p mini futures. we loved this chart in february of 2016. you can see that they have really moved together since

about noon as of yesterday. they weren't earlier. once we got those inventory numbers they came outon started to see them move relatively closely really from about 4:00 to 5:00 a.m. today we've seen them in lock step, meaning that if oil prices roll over more, we were down over 2% earlier, now just down about 1%. if they pick up and roll down more do they drag equities with them? are we back to that kind of correlation we watched in february, 2016, john? >> thank you. interesting. big moves in crude. big moves in the bond market. big moves in fx. want to bring in the oppenheimer fund c.e.o. and my uests join us now. news conference into a couple lines if you can. he was somewhat meandering and thoughtful. what did you take away? >> he doesn't want to change the regime but he kind of ignored the data.

that is the struggle. effectively they don't believe inflation is sustainable in the long run in europe but today it looks really good. so that's what they're trying to square away. >> it can't be transient, he said. it has to be self-sustained. if you look at the base effect they'll be less the back end of this year and the reviewed forecast for inflation needs the full stimulus. isn't he just saying, yes, they're good but i don't buy them yet? >> that is precisely what he is saying. the challenge with that is the market may not let him kind of stick with that for too long. and that's what happened with the fed in the u.s. when they got dragged along to tightening aggressively now it seems. and at some point draghi may end up being dragged along just as much. >> i want to bring you into the conversation and go beyond what is happening just in europe. what is happening globally right now in the bond market is a repricing and repricing of yields higher. >> it kind of ties into what we're talking about between

mario draghi trying to feel a little more hawkish and oil prices kind of hitting the skids. there is this feeling look based on the way oil prices have acted the last few days you're going into an early 2016 kind of environment and actually when i walked in this morning i heard our fixed income guy suggest that before he even walked in today people were looking for bids in anything related to the energy bond market. but we're so different than we were last year. last year you had all the economic surprises globally to the down side. you had energy collapsing because of just this global, emerging currency fear. you had a wholly different quantity ate iff easing. there was no quantitative easing coming out of the euro zone. they hadn't established a plan yet. again, i think we are in a very different spot but it is one of those things that causes a market correction and an out of the blue drop in the price of oil is kind of the market that was already ripe for a little bit of a correction. >> calling for that 23.40,

you're going to buy on that dip. yeah you got crude rolling over. have we seen exit lags and yields rising? but the market isn't reacting. is there a remaximum on the 10-year, a sell off in oil that will start to trigger the correction you're looking for? >> i think you're kind of there. it's sort of happening as we speak. >> but we're not really seeing it. if you look across the board, they're flat. >> that's correct. and you're seeing some internal correction like the defensive sectors since the beginning of february have actually, the four main defensive sectors, utilities, consumer staples, and health care, those four have out performed since that move we've had off the january, end of january breakout. so i think the market is kind of correcting internally. you've seen some weakness over recent days. again, i don't want to kind of -- i don't want to, pardon the use of the term, trump the fundamental call with a correction call. i do believe the market is going to correct but the fundamental backdrop is very, very different than it was.

yes, it'll mean higher rates. to your question about what level of rates will it take to really slow the economy down and cause a recession and there by a bare market, it is not a level of rates or a number. it's when it inverts the yield curve. that's what shuts down credit and credit derivatives which is how we end up in a recession. we're still years away from that. >> you have energy, materials, tech, they're off. on the up side utilities, financials, and consumer staples. is that your playbook? do you want to sell the defensive and buy the cyclical today for example? >> for today, no. i think you need to, again, 47% correction is kind of our target but our policy right now is not to be negative. i don't want to suggest investors get negative or defensive for a correction. i think that would be the wrong course of action for what the next year to two look like for the upside in equities on the back of global economic activityy and better earnings. what i would do, and our advice to our institutional clientele, is if you're levered long, if

you've got a high use of leverage, a more aggressive fund, take down the leverage a little bit and be more market neutral. if you're a long only fund with very significant sector offensive bets, just neutralize it for the time being because you cannot get offensive if you're already offensive on a decline. >> do you agree with tony basically? this is a pause in the market. the fundamentals are there. you might take a little money so you can reinvest it on the dip. or is there a larger, structural problem here because we're depending upon what we think might happen under a trump administration? >> yes. so i think that i would kind of put it slightly differently. that is, the fundamentals today are in very good shape. there's no quarling with that aspect. the challenge is how do we get the markets to the next level? and on that, if policy is really not that supportive, if fiscal deficit doesn't widen, i think the likelihood that we get to the 3% growth rate that they seem to be pining for, is

just not going to happen. and if that doesn't happen, the markets are definitely somewhat stressed from a valuation standpoint. >> tony, what about that? to what extent are we taking in numbers such as 3% g.d.p. growth to really support these stock valuations? >> it is very interesting. i met with, last week, probably 25 c.e.o.'s from various industries. i've really significantly under estimated the impact of no new regulations. so in my numbers, and i don't think in investor behavior, i don't think there is this great anticipation of the trump fiscal stimulus. i think there is a huge -- there was a record corporate new issuance, huge cash balances on most companies in the u.s. those cash balances have not been put to work for fear of new regulations, fear of new hire -- new, higher taxes. just knowing you're not going to get any new ones is kind of unlocking the animal spirit.

if you actually get legislation done, that would significantly add to the 130 in earnings. that's my base case and my current case. i don't think investors really are blocking in big changes. i would just suggest that actually the current economic data is weakening a little bit. what i find most instructive is the i.s.m. new orders, the global citigroup economic surprise -- all those things that have forward looking implications for industrial production actually are trending better. there's probably going to be a rate of change slowdown because we've ramped so high in some of these optimism surveys. again, those are good leads. >> what strikes me? no one was really talking about this before the election. now you have a run up, and all after sudden while this was happening before the election no one was really talking about it. why not? >> i think there is some truth to the fact that synchronized global recovery kind of started in the second half. we are still going through

that. we're slowing down but data is reasonably good. the question is, does it change the trend in a big way? and the point tony is making is business investment will go up. i remain deeply skeptical of that. i think for that, effectively the global growth prospects are not long -- on a long-term basis rather than just a short-term basis have to change. i don't think things have changed that dramatically for that to come about. >> it's kind of weird, dave. i upgraded this market before the election based on better global economic activity and down graded it based on the initial ramp off of that election. that election law so it's kind of weirdo opposite now. i agree with that. you'll have to have some real ramp in global activity and, again, some of this is nuance based because i just, in speaking to a mid sized, multi billion dollar industrial c.e.o. last week, you know, just a sense of relief that came from no new regulation is likely to open up some kind of

capital spending, which is how you get higher productivity and ultimately greater margins and revenue gains from current levels. >> thanks very much. oppenheimer funds. tony dwyer, thank you. joining us now to talk about oil on the phone is a senior vice president of raymond james. i have a great chart here. you can't see it, paul. come inside the bloomberg and you can take a look at oil versus the 100 day and 200-day moving average. closed below the 100 day. it kissed the 200 day earlier today. this is the worst streak so far since last november. is this capitulation? paul: it feels mostly like sentiment trading. so whether it is the bottom or not it is hard to say. it is certainly not driven by any new fundamentals. yesterday we saw inventories, you know, and the numbers were, you know, not great but hardly

sufficient to warrant a 5% drop in prices. on top of that we've seen psychological factors, particularly the comments by the saudi minister saying, well, maybe they're not going to extend the production cut beyond the middle of the year. they had never committed to doing that of course but there were hopes they might consider extending and now he seemed to be pouring some cold water over that. clearly that contributed to the recent drop. technicals come into play. if we just look at the fundamentals, global demand is currently in excess of global supply. that is fundamentally bullish. that means inventories are shrinking if we cast the net broadly. it does not have to show up in the weekly data out of washington every single week, because we're looking at global supply, global demand. but that point often gets lost

in the shuffle. >> do you have to be a contrarian buyer here? when we had the runup, we were kind of moving too soon because we didn't see the inventory draw down, the market hadn't gotten tight. now we're really pessimistic. at the end of the day we're going to start to see those cuts from opec circle through the u.s. and that's going to wind up tightening supply. you need to be buying this kind of down draft? >> yes. people should be buying this down draft. absolutely a buying opportunity. your comment about the cuts from opec showing up, they're already showing up. it just may not be in the weekly u.s. data. remember, three-quarters of the world's oil demand is outside of north america. and so there is a lot more inventory than europe, you know, japan, china, etcetera, than there are in the u.s. the real-time data, it is true, is only from the u.s., which is why the market fixates so much on these wednesday morning data

points. but that's not a holistic picture. it does not tell the whole story. if people focus too much on those numbers, they're going to really miss the forest for the trees. >> right. good point. we wind up seeing energy stocks take a leg lower because of this sort of move. what name do you want to be picking up? >> so companies large and small that have a lot of leverage to the oil recovery, our team thinks oil can touch 70 at some point in the next 12 months, so, you know, great example just reported an acquisition this morning, marathon oil, mro. this is the company that has a presence in all four of the -- a great u.s. balance sheet. no generating positive cash

flow. another was presented at our conference yesterday. this is one of the top three producers, got some interesting exploration option in guyana as well. that's been generating some headlines. these are fundamentally oil producers. service contractors, you know, you mentioned halliburton, are certainly part of the story as well. the faster oil prices recover, the faster we're going to see further acceleration. we've already seen a lot of it. but we think there is more to come. >> good point. i should point out marathon is up almost 6%. so bucking the weaker oil trend. hess is down by 0.8. thank you very much for your perspective. >> thank you very much. the session looks like this. equities here in the united states falling about 0.1% on the dow and the s&p 500. if you switch up the board it's an e.c.b. which has revised its forecast for inflation, that little bit higher. the balance of risk has

improved. the down side risk has subdued. that means a stronger euro in reaction to the news conference with president draghi up 0.5%. e reclaim very briefly the 1.06. we'll discuss that and more very briefly coming up from new york city. you're watching bloomberg. ♪

>> this is bloomberg daybreak. we're here in the hewlett-packard enterprise reen room. we'll be joined tomorrow immediately following the payroll results by bill gross. an optimistic jamie dimon spoke to bloomberg tv earlier and

discussed the growth agenda under the current administration and the main concerns u.s. businesses are keeping an eye on. >> america is doing okay. china is doing 6% plus. europe is doing better than people thought. japan is doing better than people thought. so the economic indicators are pretty good. i think business in the u.s. is growing confidence because of policies, you know, we have the tax policies, you know, the investment world is a little confused what it all means of course. then the biggest concerns are not the economy but policy. so more around trade, get that right or obviously north korea and things like that. >> our capital markets managing director for equity research joins us now. that's a lot of hope, right, factored into a stock that has risen about 35% since the election. how much more potential is there for banks to grind higher if you don't get the actual, tangible stuff out of washington? >> you put your thumb right on it. we need to get tangible results out of washington to have these bank stocks go higher. but that being said, we just

concluded the r.b.c. financial services conference. i can tell you the banks at this conference in the last two days were telling us that even if we don't get stronger loan growth they're already seeing the benefits of rising interest rates so the banks are going to see better revenue growth due to rising interest rates. >> so is that what is likely to drive it is rising interest rates? you just put your finger on it. we aren't really seeing loan growth yet. we heard about these animal spirits, a lot of predictions. we haven't seen it yet. >> that is correct. you're absolutely right. it was a convincing message we heard the last two days that the rise in rates in december is positively affecting revenues. we expect another rate rise next week. now, the management teams did say they expect this loan demand to accelerate in the second half of the year should we start to see progress in washington. >> what did you sense from the c.e.o. jamie dimon and the optimism we talk about in the general economy. that optimism within the banks, themselves, will it translate to those banks taking more risks? >> i would say not necessarily

having to take more risk but just meeting more demand. ist -- with the annal with the statement, he was very optimistic and management was about the future of this economic growth. >> i guess what we're trying to find out is whether these banks kind of sit still. of course they won't. but can they remain as they are to capture the story as it improves or do they have to adjust them to become more aggressive on the margin? >> they don't necessarily need to be more aggressive. having some deregulation will free them up and not have them always looking over their shoulder making sure that the regulators don't come down on them for doing something that the regulators perceive to be wrong but i will say that if these animal spirits do start to develop, the banks will be there to certainly support that growth. >> how eager are they to take on that more risk? you talk to some bankers and they say we're not that anxious to go back to the good ole days. >> i would say they learned

very hard lessons in 2007-2008 like we all did and as a result they have not forgotten those issues. therefore, i don't see them taking anything like the risk we saw in 2007 and 2008. but incremental risk, yes. i think there will be some assuming the economy continues. >> okay. nice barriers to entry --. >> exactly. >> you -- >> you guys are bringing up important points because when you talk to the biggest banks they're not so interested in he repeal of dodd/frank. >> great to get your thoughts on our interview with jpmorgan's jamie dimon. coming up a quick programming note. a new program, second edition, comes up tomorrow. each friday midday eastern time. 30 minutes of fixed income every single week. don't miss it. from new york as we count you down to the payrolls report. an insider tease coming up next. this is bloomberg. ♪

>> from new york city for our viewers worldwide, this is bloomberg daybreak. the markets look a little something like this. 25 minutes into the session, equities firmer by 0.1% on the dow. move to the upside by 0.16%. an ecb acknowledged an improved outlook for the euro zone economy with president draghi mentioning the improvement sending the euro higher to almost $1.06. very briefly reclaim the handle up 0.5%. tomorrow on a nine goy losing streak for treasuries up two basis points again today it is all about payrolls. >> exactly right. we have a hundred percent likelihood the fed will raise next week. but it is possible i guess, conceivable it could change that. >> the survey, 200,000. the whisper around the bloomberg 220k. it was just like 204 as of yesterday then we got the blowout a.d.p.

>> and this late into the cycle. that is what is so remarkable. >> i think it is as well. when you reach full employment to add 200,000 at that kind of rate to encourage people to come back into the work force, i think of our bearish u.s. economy, the labor market to some extent, this kind of data supports their argument there is still some slack. >> it makes you bearish on the over all model. we were missing something. the model was not telling us what we thought we were hearing. >> that wraps up bloomberg daybreak. a reminder we'll hear from bill gross tomorrow immediately following the payroll report, 8:30 eastern. from the bloomberg daybreak team you're watching bloomberg. ♪

vonnie: it's 10 a.m. in new york 3 p.m. in england and 10:00 p.m. in hong kong. mark: welcome to bloomberg markets.

vonnie: from new york to london in the next hour and we cover stories out of washington. here are the top stories where following -- in markets, oil is hitting its lowest point this year, below $50 per barrel and u.s. stocks are following their european counterparts lower. bank the european central keeps its qe program study but president mario draghi is striking a less dovish tone. parts: and we will hear of the exclusive interview with j.p. morgan chase ceo jamie dimon who says he's confident the president trump will get parts of his agenda through congress and he gives the president credit for bringing back animal spirit.