deutsche bank stock dropped after underperforming the big five on wall street. the ceo says return to growth is delayed. a meeting president draghi might prefer to skip -- from new york city, d.c. and frankfurt, a warm welcome to "bloomberg daybreak." over in d.c. is our very own david westin. david: it's about that plan that , whatut -- what it means it could get done as a practical matter on capitol hill. share -- $.39 per substantially less than last year, but they guided to that. their revenue was up some. we will be interviewing mark

fields in just a few minutes about exactly what it tells about where they are in the first quarter and with the rest of the year is going to look like. you the ecb bring a.m.y decision at 7:45 eastern time. futures be stable out there. s&p 500 futures up marginally. we've pulled further back from --se highs alix: time for the morning brief. weekly initial jobless claims in the wholesale inventory the durable goods and the trade balance from march. the treasury will auction $20 billion in seven-year notes. finally, today is the busiest day of first-quarter earnings season with 65 companies reporting.

we've got alphabet, amazon and starbucks all reporting. emma: president trump one people pulling the u.s. out of nafta immediately. the white house as the president ruled out terminating the free trade agreement after talking with the leaders of mexico and canada. instead, the three countries will renegotiate. provide an early test for president trump -- the taiwanese will submit to the u.s. as an s july, putting 's desire toump increase exports against his plans to work with china. the administration handed out a one-page list of bullet points that authorities say will make it the biggest tax cut in u.s. history.

that could determine if a cut in corporate taxes from 35% to 15% would only be temporary. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. david: whether you call it a plan or an outline, we now have some specifics of what president trump wants to do with the tax code. now comes the hard work. negotiating begins. there's nobody in washington who knows more about what could be done and should be done than josh -- he worked for goldman sachs over in london. he just recently took over as president and ceo of the business roundtable in washington where he works with jamie dimon on policy initiatives. .elcome to bloomberg

tell us what we know right now that we didn't know 24 hours ago. josh: what we got was very important -- the administration engaging on substance on a tax reform plan. that's what went wrong with health care. they've now organized themselves, they've got really good people putting together a substantive tax plan. they gave us yesterday just the outlines of that plan. what i think should be encouraging to everybody is they with positions and working with leadership in the senate and house. david: give us a sense of how dramatic these outlines are. how big a change would this be if they could implement this? josh: it would be huge. any substantial tax reform would be fantastic for the economy.

substantial, i mean from the business side, a significant reduction in our way to high corporate rate. the trump outline that came out yesterday does both things. they're cut in the corporate rate is fantastic. probably larger than can realistically be achievable. i like stretch goals. they ought to stretch for that 15% and if they get anywhere close to that, it will be a big win for the u.s. economy and u.s. job creation. david: i would it position us in terms of competition internationally? --s below japan and the u.k. is that achievable? josh: probably not. alike that they are setting really good marker out there of how far they want to stretch in getting the right down.

-- the rate down. if they could get anywhere close to that 15%, that would be a big win for the u.s. economy. david: you worked with some of the largest companies in the country. are they unified in their support for this sort of a large tax cut? -- there's tax rate a big disparity between what companies actually pay. representsoundtable 200 ceos of america's the companies. 15 million employees, $6 trillion in revenue represented by our membership and they are united in support of fun mental tax reform. -- a fundamental tax reform. the kinds of principles the administration outlined yesterday, they have the

unanimous support of the members of the business roundtable. david: let's turn to how you pay for it. is there concern among your ceos if you run the deficit up, that may hurt their business? josh: sure. the principles the roundtable includelude -- put out a plan that is fiscally responsible. it ought to be possible to do substantial tax reform without blowing a huge hole in our overall debt burden. david: the suggestions that we would make it up by tightening loopholes. did that come back with a lot of your ceos think i will lose these loopholes that helped my bottom line?

josh: our members have taken the decision that it's better for the economy and therefore better for them overall if we in fact a really large portion of all the appendages on the tax code in exchange for a lower rate. our members are ready to make that exchange. that's really where the administration was pushing yesterday. we are going for a dramatically lower rate. your members are in favor of this. can it get done? is this the best way to go about it? set out some general principles without specifics. josh: it's the way to get it done right now. there's a lot of ways to

approach this sort of thing. our hope is the admin's ration fills in their outline with the leadership in the house and senate. -- our hope is the administration bill fills in thr outline. there was a positive reaction from the senate and house leadership. leader mcconnell and speaker ryan and chairman hatch and chairman brady put out a joint statement saying they think these are critical guideposts. it's encouraging news that the administration is now working closely with the leadership in both houses. that should give us encouragement that however the final details end up come over the next months, we are on the path to serious tax reform.

that's what job creation needs. his views onl get trade in just a few minutes. alix: some earnings trickling out today. under armour up 9% in premarket. first quarterly loss is going public in 2005, yet only a one cent loss versus four cents loss. ford out with earnings just moments ago. mark fields will be joining us with his outlook. this is bloomberg. ♪

alix: this is "bloomberg

daybreak." deutsche bank getting hit by 2%. its trading revenue was just up 11%. the average rise for the big five in the u.s. was 20%. did double on more than last year and overall revenue did fall 9%, but that was because of an accounting charge. bank blamed volatility. ford reporting moments ago. it's adjusted profit loss down 42%. earnings coming in at $.39 a share. ony are spending more autonomous cars and electric vehicles now to pay off later. not quite paying off yet. david: ford did announce its first order earnings moments ago.

we are joined now by mark fields, ford motors president and ceo. good to have you here. mark: always good to be on. thank you. david: we've taken a look at their earnings. you had a solid quarter, you beat analyst expectations. what do you take away as the top line for ford in this quarter? mark: the top line in the quarter, we delivered a solid quarter, solid cash flow. we grew our transaction prices in the u.s. much more than the industry. as we go forward, we are investing, one foot in today and one foot in tomorrow. we are making investments that will power our growth and profitability in the future and we are investing in that now. time, maintaining our guidance for the year on $9 billion and profitability in the company as we go forward. david: you are seeing some

softness. you've been hearing for this. where are you in the process of cutting back on production to adjust your costs for that new demand environment? we started talking about the plateauing of the u.s. market last summer. we've been preparing for that. when you look at the elements of running a good business as you approach the end of the cycle, our inventories are in good shape around the world. time, from a credit standpoint come our credit operations have really gotten ahead of the trends we started seeing last summer. going forward, we will keep our production match to demand and continue to work on costs in the company and continue to make the investments in new products that will drive our growth going forward, like we announced this quarter with our expedition and navigator. david: in that new world with

more modest growth or even declining volume, the cost control -- where are you on cost control? is that a timing issue? mark: when you look at our costs, we are investing in our emerging opportunities. net of that, when you look at the costs for this year, we will have $3 billion in cost savings across efficiencies that will offset each other. things we are seeing in commodities and things of that nature. the net of the cost increases is around these investments that we are making in our future. overall, we have an intense focus on costs to make sure we are mindful of not only the current environment but also making is even more physically fit for whenever a downturn comes. david: there's a lot of talk about the glut of used cars

going on the market. how much of a drag on your bottom line is that? mark: we have started planning for this since last summer. when you look at our ford credit ofrations, the impact trading value -- we factor that into our business. used car prices have come down. there are some slight overlaps between new car and used car buyers. customers are coming in for new cars. that's why we've guided this year to the industry to be down slightly. we are very well prepared as a company for that. david: the big news, the earnings -- also news out of washington about nafta. -- presidentse

trump tweeted that he talked with the leaders of canada and mexico. ford'stical is that too operations? mark: nafta has made the whole hemisphere a lot more competitive and has allowed us as a company to be the largest manufacturer of cars. what we are encouraged by is that president trump is working the mexican president and prime minister to go. -- prime minister trudeau. nafta has been very important for the hemisphere and also very important for the u.s. because it supports a lot of good paying u.s. jobs. david: thank you for being with

us. up, we go live to frankfurt, bringing you the ecb policy decision at 7:45 eastern. followed by president draghi's news conference just 45 minutes later. you are watching bloomberg. ♪

jon: it is a big day for earnings. futures up firmer come up 24 on the dow, positive two or three points on the s&p 500. companies report earnings after the bell. look out for that come including microsoft, google and amazon. treasuries unchanged at 231. head of the ecb, euro and dollar at nine cents. david: still with us is josh

bolten, head of the business roundtable. we want to talk about nafta a little bit here. amongst all the tax talk yesterday, there was the reports that we were going to pull out of nafta altogether. then come in got reversed. president trump has just tweeted this morning -- happens.bout how this you've run a white house. how does it happen that you get reports that we will pull out and it gets turned around within a few hours? josh: you don't want this to happen. if you are the chief of staff, you're disappointed when an internal conversation or proposal gets leaked. it is controversial or it's not policy or it's a bad idea. you have to draw it down. i'm assuming that's what happened here.

the tweet you just read is encouraging news. a lot of us were very concerned, our members were very concerned yesterday by the report that there was a proposal circulating in the white house for the west withdraw from nafta. the tweet you just read from the president is very encouraging and means they will have a constructive conversation about how to modernize nafta. david: at the beginning when president trump was first be aed, there was set to real rupture in trade, particularly across the southern border. are you and your members now reassured that this will come out a different way? mark: we're supportive -- josh: we are supportive. david: what would you change? josh: it's a 20 some year old agreement at this point. a lot of the rules were written before there were digital products. the current nafta doesn't

adequately cover state owned enterprises in the way that modern trade agreements do. it doesn't fully cover intellectual property. there are important ways that it can be modernized. saying inelds was your last segment, it's hugely important for a large number of u.s. businesses that the supply chains that have become embedded in the whole north american between canada, mexico and the united states, those supply chains are critical to so many u.s. businesses and disrupting those wouldn't help the creation of u.s. jobs. it would make our u.s. companies less competitive against their asian and european counterparts. that week this morning from the president is very encouraging. we will be supportive of a constructive negotiation.

david: welcome to the world of reporting the news under the trump administration. --re is a second tweet now if we do not reach a fair deal for all, we will terminate nafta. relationships are good. deal very possible. that's always part of the negotiation. that's the kind of thing you keep in your back pocket. everybody understands if you don't reach a fair deal, other things can fall apart. from the standpoint of the business roundtable members must some of the biggest companies in america that are deeply integrated in that north american market will be pushing for a successful negotiation that modernizes the agreement, doesn't undo it. i'm doing it would be a disaster.

it would be a disaster. david: when would the negotiations be finished? josh: there's a complicated procedure about notification to congress -- the administration hasn't yet done that. they have to give congress 90 days. the hard-nosed negotiating probably won't begin for several months. be pushing for them to get it done by the end of the year. david: stay tuned. josh bolten, thank you for joining us tonight. -- today. jon: mario draghi might want to skip this meeting -- the decision to minutes way. the news conference, live here on bloomberg. ♪

jon: from new york city, a big day for earnings. we are up 34 on the dow, positive for on s&p 500 futures. head of earnings from amazon

come out for that and microsoft. ahead of earnings from amazon, microsoft and alphabet. the inflation forecast over at boj. a weaker japanese yen. back a touchulling from the highest we've seen in 2017 a couple of days ago ahead of that ecb rate decision. that is 15 minutes away. washington, white house hardliners have lost their battle to get president trump to threaten to withdraw from nafta this week. the president has agreed not to terminate the trade agreement after talks with the leaders of mexico and canada. the three countries will now discuss ways to make the deal more balanced from a u.s. perspective. boris johnson says britain would probably join the u.s. in further military action against syria if asked.

in 2013, lawmakers they rejected a request by prime minister david cameron to authorize airstrikes in response to serious use of chemical weapons. says some in the u.k. still have illusions about brexit. she says that is a waste of time. the u.k. will not keep the same rights and privileges it had in the eu once it leaves. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. jon: the wait for growth at deutsche bank continues with --ding revenue trading shares touched their lowest level in a month after an underwhelming quarter reignited about the ability to recover lost ground. we always said we give

ourselves a window up 34 months to execute. we also said we need to make sure that we've covered all ativities to put in place proper leader structure. that will take us another two quarters. i would expect we would be ready to go. when we go, that will be decided based on market conditions and the performance we are currently seeing in the business. ahead of the ecb decision, looking at their performance compared to their peers come underwhelming is an understatement. matt: absolutely. if you look at just fixed income the u.s.alone, peers had 24%.

deutsche bank had 11%. if you look at equities trading, u.s. peers had a little more than flat. deutsche bank had 10% shrinkage. they really underperformed their u.s. peers. they have raised a billion euros in capital over the last month. euros.llion they are preparing the asset management unit for an ipo. it is a leaner business. all great stuff with nowhere to grow. where is the growth going to come from? what are the elite optimistic about? matt: they really do think they have reached a turnaround point and they are now on their way back to start taking market share away from their u.s. competitors.

becauseon they trail is the securitization part of that business they pulled out of, they don't think that is the key to the future. the equities trading business where they admittedly did poorly in the quarter they just reported on monday think the great place to grow because it is a low capital business . they think if they stick to , they can come back and start to make money. jon: we caught up with someone on the banks over in europe -- would you take the rate from -40 basis points to zero? some of these banks could go up 25%. , whatilding behind you are the prospects of a rate hike anytime soon? matt: it doesn't look like those -- we will not get it today.

john cryan from deutsche bank was just talking this morning about how he would love to have higher rates. low rates are hurting his profit. it's not helping him on the top line. there are some in the ecb who say the balance is -- the risks are now balanced. you may see that language change during the press conference. you probably won't see language where mario draghi reserves the right to lower rates if needed. mario draghi will remain dovish. there are hawks with their claws out on the governing council. jon: let's get to that language in a statement. matt miller life and frank for. -- live in frank for it. -- in frankfurt. themos fiotakis, great to have

you on the program. i want to begin with the economic assessment. the risks surrounding the eurozone gruff outlook have become less pronounced but remain tilted to the downside. that was the statement from the ecb back in march. did they change that today? does the outlook still remain tilted to the downside? themos: generally speaking, in terms of how we assess the data come up the business has been a lot stronger than we initially spec it. expected.ly whether you look at surveys or the on implement rate, the data has been quite solid. with respect to what they want to communicate at the central bank, we are in this difficult position where over the next few months, they will face very strong growth and low inflation. on this commodity prices rise

fast. qe has run its course. at the same time, economic conditions run tight. they have to create some space for adjustment in terms of the language and the message but without being too hawkish. this will not start fiercely today. start atbably going to the june-july meetings. today, we are looking for some hints of positivity. in statements you highlight response to the survey data. alix: it has been by european equities, by the euro -- buy european equities, buy the euro. the market price action

can be moving left and right. we have seen that in the previous meetings. ourselves fromve today's meeting because it is a tricky meeting with respect to timing with the french elections. the market will start looking through this this summer. euro.e been long the we have been expecting higher yields. the equities to outperform in europe relative to the rest of the world, particularly rate sensitive factors -- one has to have patience. this will play out over six months. jon: cpi in germany back on track. a confidence print in the eurozone. the path of least resistance is still for a stronger euro. , what kind ofout

numbers have you got in mind over the next three months? themos: that is a very good question. towardsgradual rise 115, it is not going to change the outlook. if you get a substantial, very 120, youe above 115 or could be talking about numbers that could have an effect on the ecb's inflation forecast. we are coming back from a very low set of inflation prince last year. this year, you are seeing higher inflation prints. unless inflation rises, you won't see quick moves close to the ecb target this year. that means the ecb needs to keep the whole thing on track. alix: how does mario draghi address this?

we have consistently better data , some confidence to pmi and earnings coming in relatively strong. how does he categorize the better data? themos: it's increasingly quite clear that there is a slew of data, particularly relating to domestic demand in europe that is quite positive. increasingly, it will get harder to disregard. riskst comes to inflation , inflation risks are not expected here. if oil prices stay where they are and we do expect a gradual rise -- if they do stay where they are, you will see inflation nearing 1.6 in the next few months.

which doesn't give a huge rush for a hawkish message. inflation expectations are coming down. urgency in terms of inflation. jon: does the depot rate rise before qe ends? themos: we don't think so. jon: themos fiotakis, thank you for joining us. coming up, the ecb decision. from new york city, you are watching bloomberg. ♪

the: this is "bloomberg daybreak ." coming up friday, alan greenspan joins us. this is bloomberg.

jon: from new york city, this is "bloomberg daybreak." moments away from the ecb monetary policy decision. theres firmer, up 25 on dow, positive three on the s&p 500. the euro has been treading water through much of the morning. market, yields up a single basis point. ahead of the ecb decision, matt miller will be in frankfurt. here at the table in new york -- are youio expecting any change in 25 seconds? >> no change today. no change to key policy rates, the asset purchase program. no change to the language. possibly differing everything to june. jon: do you think a change in

the language at this point would make sense? >> not given how hard they work they will make sure to be more cautious this time. alix: do they wind up bridging the gap to june in any way? >> maybe in the q&a. there's no reason for them to take any risks here. jon: rates unchanged at 0% on the depot rate stays at -40 basis points as well. the ecb staying at a lower level for an extended period of time. the sequencing remains there as well. running until the end of december or beyond if needed. the ecb think we runs until is on a sustained path towards their goal.

in.e doves whe you see the euro moving lower, especially against sterling. any surprise here for you? >> no surprises. this is as stable as we could have wished. this is the no change back let's see how he handles the q&a. they want to communicate that the current monetary policy sense is the appropriate one. mind, before we get to the ecb, doesn't make sense that he comes out and says the growth has improved and the outlook is improved but the risks still remain tilted to the downside? does that make sense? >> this is one of the best

cyclical recoveries we've seen in a while. the extraordinary circumstances that the exit of the strategy will see, the risks are always tilted to the downside. if we've learned anything from the fed path and boj path, we've seen disappointing recoveries. even from a staff projection perspective, they know their risks are always undershooting forecasts. you are still in a deleveraging process. our operating frameworks do not work as well in deleveraging processes. jon: matt miller is standing by in frankfurt. the news conference and 45 minutes or so. looking at the market reaction, the euro marginally softer. down on the session by .1%. the nuances of the statement -- for ratesuage

to remain at present lower levels for an extended period of time. what will it be like for mario draghi? there is still his statement about where he sees the balance for the economic outlook. because some governing council memories have come out and said they think it is fairly balanced right now, you probably have some punchers in the market you didn'teuro -- have any changes in the key rate. we got some big numbers out. the economic confidence huge today. spanish inflation at 2.6%. german inflation around 2.1%.

even though those numbers are boosted by higher vacation package costs, it is still inflation that european constituents are feeling. you could see interesting action in the press conference today. alix: mario draghi has to appease the hawks in some kind of way. what can he do to throw them a bone in the q&a? matt: don't forget, as much as , theyould like you to have reduced their asset purchases this month. they could go above and beyond december -- until last month, they were putting 80 billion euros a month. they've already reduced the amount of accommodation they are putting into this market. they don't want to call it tapering. ,t's enough of a bone right now even though it's news we got months ago. what will they say about the outlooks, what will they say about the bias of interest rates

going forward? jon: a lot of excitement about changes at the ecb. no one expected a big move in today's meeting. characterized as one of those that president draghi would like to skip. going forward, cpi core struggling to break one full percentage point. -- thehat the key conditions for the inflation target they can't meet. >> exactly. even headline is bound to roll get aunless you meaningful acceleration in commodity prices. even headline is not likely to be close to 2%. the battle on inflation has not been won. the growth picture is fantastic. but, let's not forget after four or five years of unprecedented auditory accommodation, some of

monetaryleaks -- accommodation, some of the weak links are extremely troubling. is key to phase out the asset purchase program first. have to see how the peripheral spreads will react to the facing out of the asset purchase program. alix: what about this outlook reflecting the risk in france and italy? we've taken a bit of relief from the first round of the french elections. innce will be behind us june. in february with italy again. germany will not be an issue. from their perspective, it may just count as one. the calendar in europe is still -- the election risk is still there.

you can make real progress. frankfurt.iller in rates unchanged at the ecb, confirming the asset purchase program at 60 billion euros a month. rates will stay at present or lower levels. we will go from a monetary accommodation in the u.s. the white house has made its opening bid for the biggest tax cut in u.s. history. there were a lot of questions left unanswered, including how we will pay for those cuts. hillng us now from capitol , congressman john yarmuth from kentucky. : that is a yarmuth major concern. inequity exacerbate

across the country. it will allow the richest americans to get even richer and to keep their money generation after generation and do very little to help the lower and moderate income americans. in every direction, i think it's a bad proposal. david: let's talk about the goals. their primary goal is to get growth going again. i assume you and your fellow democrats share that goal. congressman yarmuth: absolutely. we would look forward to working with the white house and with our republican colleagues on developing a serious infrastructure program for the country. which is the most assured way of getting growth. david: are there things that can be done with the tax code that could also stimulate growth beyond and infrastructure plan? congressman yarmuth: yes, i'm sure there are. when youas shown that

allow wealthy people to keep their money and corporations to keep their money, they tend not to reinvest in their operations. they tend to buy their stock back and give dividends. i don't see where there's any economist out there who thinks this proposal will do much to raise growth rates in the economy. sufficient to raise -- david: there are some things in this outline that could benefit less wealthy people. $50,000 for a family you don't have to pay any taxes on. postcard tax returns. are there things you could get behind in this outline? congressman yarmuth: absolutely. i think doubling the standard reduction is good. good --uction is

standard deduction is good. back, theyt money tend to spend all of it, which is great for the economy. those proposals, i could get behind. david: going back to the question of how you pay for it, what they say is they will cut down on a lot of loopholes for wealthy individuals and corporations. could they make up the difference in the cuts? congressman yarmuth: i haven't seen any estimate that indicates they could. that does yield a lot of revenue. that would be one significant offset. there are not nearly enough to dollar --e trillion five or $6 trillion -- $5 trillion or $6 trillion. david: coming up in the next

hour, we will be speaking with commitment peter roskam of illinois -- congressman peter roskam of illinois. jon: we will bring you mario draghi's news conference at 8:30 a.m. eastern time. in his conference he might like to skip. -- a big day for earnings. amazon come out the best and microsoft coming up after the bell. -- amazon, alphabet, microsoft coming out after the bell. from new york, you are watching bloomberg. ♪

♪ >> president trump's phenomenal

tax plan, one page, many questions. how does the government pay for it? economic enthusiasm. , the returnk drops to growth delayed. in new york city, frankfurt, d c, everywhere on the planet, this is bloomberg daybreak. days, what is0 coming up? we will talk to the republicans now. also, we will talk to alan growth get going again? >> we look forward to that ahead of the news conference from the score as follows. futures trading water, s&p 500

up .1%, a marginally weaker euro story. softer by .1%, treasures on offer at the margin come up one basis point. >> weekly initial draw bliss claims, durable goods, tradable goods. the treasury will all can 28 billion dollars in seven-year notes, the five-year auction like, and today is the busiest day of the first quarter earnings season. 65 s&p companies reporting, out or the bell, out for bed, amazon, all reporting. >> saturday marks the end of president trump's first 100 days in office, and there has been a flurry of activity in washington make sure the report card is a good one. joining us with the latest is marty shanker.

i think they are understating it. weeklot of activity this has been frenetic to say the least. we are at a point where donald criticizing aing, deal his own white house made with the democrats to get this budget deal done, so who knows where that is going. >> have they got the deal done? are we going to keep the government going after tomorrow midnight? the democrats last night were accepting the commitment from the white house to make sure these payments to insurance theanies get made and that leadership of the democrats said they were encouraged by that, but then this morning donald "no! for bailing out the insurance companies." ere were reports

yesterday about pulling at a nafta. >> with this administration, there are so many vested interests within the white house , reporting something definitive about what donald trump would do is a dangerous business, so what we try to do is make sure that we know what we know and we are not >> -- go back to the tax policy. >> there has been criticism saying it is not detailed. said he thinks given where washington is that it is a sensible approach. extent, thisin gets to donald trump's style of leadership. , anakes broad promises awesome tax proposal, and traditionally washington likes to see legislation. of right of pills and send

them to congress. that is not what this president does. it is this nonconventional approach the donald trump takes that people have a hard time getting your head around. >> is a too soon to know whether it will work? >> it is too soon. 100 days is artificial for us as citizens. i think that expectations and benchmarks are fraudulent. we have to wait and see. >> thank you so much. let's get more on the ecb policy decision, rates unchanged, the asset purchase program will 16 -- continue at $60 billion and reiterating rates will stay at present are lower levels. joining us to discuss is matt miller in frankfurt. an important question, how president draghi communicates

the following, keeping rates unchanged, communication unchanged without sending the message that the ecb does not buy into the recovery that a lot of other people are buying into. a good point. what he did recently was say the risks to the downside have diminished, so he wants to continue with that statement that the risk to the economic outlook are to the downside. the hawks want to take that out sayse statement, but he the risks have diminished. that may be a small bone he can throw to the hawks and a way to keep the market from losing confidence in the economic recovery that has been part of the fuel behind this rally. >> same question to you. problemuld reverse the saying the economic recovery is there because policy is easy.

prove that monetary policy is working, but in order to get that growth upswing, you need policy to the accommodative, and seeing improvement is not enough, neither growth nor inflation. we want evidence that these improvements are self sustained and enduring. that is a very subjective, qualitative assessment, so he -- that is the spin they could give. need tothe market rethink the optimism over the positive data? >> i don't think so. , think this is a genuine healthy cyclical balance, but the market has to consider the exit strategy. day, the riskshe are to the downside just from where you are. ,his is a deleveraging economy

and the risks remain around the periphery. if the exit doesn't work out, is ?t on conceivable we need to see where bond yields go when you exit. everyone, myself included, has decided it will be a snoozer. matt miller in frankfurt, the big one for mario draghi, the french election. a time horizon longer than five minutes in two weeks from the politics on the periphery, what is happening in italy, the potential for an election, something still in their horizon? >> absolutely. where do you put france? consider how high unemployment

has stayed in france. that is the reason that marine le pen has such a large amount of support, even if she does not win, she still has 40% of the country that may vote for her for president, so that will be a concern mario draghi has. is stephanie something mario draghi will say. we do see recovery, but because of accommodative policy with -- we put in place. he has said at every meeting and will repeat it again today. >> every central bank wants to make it exciting when they , boringhe balance sheet with accommodation. will they make it boring? is that supportive, and word you want to be? i think you will get a selloff in the euro. the risks are skewed.

given position, the euro may rally. it makes for a very low volatility environment, especially fx markets. is you have no fiscal, concrete news. on the european side, you also don't have any, so fx volatility is likely to drop further and you may continue to have a good environment for equities, allowing earnings growth to keep coming in, low interest rates, low volatility, by the way shouldn't are allowed to rise further. the story a few months ago is we would see central-bank , and now it seems we would are back to the diversion idea. we are at 197 basis points on

the bind spread. -- bund spread. >> you probably get stabilization of the current levels. discussing is that convergence path is not ready to take off, which is also in line with some of these currency pairs. dollar isr that the undervalued, the euro undervalued, but you don't have the catalyst to unwind that they wish and gap. you may be in this little volatility and nondirectional market environment for interest rates, currencies, maybe less so for equities. quickly, first question for mario draghi, what is it? >> my first question will be

about the euro because we have seen an incredible move over the last week and a lot of that is down to the french election, but like his predecessor, they don't like to see quick moves and currency, so it is not what rate you want to see, but how quick is it and what he think of the move so far. >> thank you very much. for fullo stay with us coverage of mario draghi's news conference at a 30 a.m. eastern time. republican peter rostand chairs the house ways and means committee joins us live from new york, frankfurt, and d.c.. this is bloomberg. ♪

emma: an earnings roundup, first quarter profit fell 42% at ford. ford spent billions on self driving and electric cars. surged,f under armour posting a smaller loss than expected, renewing optimism under armour can pull out of its slump. comcast reported first-quarter profit that beat estimates, surprising with a hit. the company is the largest cable operator in the u.s.. that is your bloomberg business

flash. david: the white house says that tax reform is about growth. business basically agrees with the president, at least on the goals. substantial tax reform would be fantastic for the economy, and substantial, i mean from the business side a significant reduction in our corporate rate and a switch to a territorial system of taxation. the trump outlined the came out does both things. david: joining us now is peter roskam of illinois. welcome back to the program. >> thank you. david: looking at you said before, it looks like there is a lot that agrees with your position. there is a lot of synergy here.

what you will see is the white house and capitol hill working to bring these together, so ultimately one tax plan. that is the goal. david: at the same time, there is the question about how you will pay for it because it looks like this might affect revenue substantially. are you looking for a revenue neutral plan ultimately? are looking for a permanent plan, and the pathway is that has to be revenue neutral. get to the way to permanent come and permanent is worth pursuing. if what we are trying to do is to incentivize and influence business to have a manufacturing renaissance, the growth we have aspired to, then that means there is a big premium to be paid. so permanence is the ultimate goal, and the pathway is to make sure it pays for itself within these logit wind as and these hijinks rules on capitol

hill. toid: permanence is a goal be pursued, but you have to come up with a lot of revenue to offset the tax cuts in the plan. where will you come up with that revenue? porter adjustment taxes not in this. thee have a blueprint and house to do this on a revenue neutral basis, scored dynamically not statically, so real world scoring and evaluating how tax policy changes behavior, but there are two big things drivers within our blueprint, one is border adjustment and the non-net deductibility of interest. here is why it is important to pursue this and not to back off at the beginning. i come from illinois. my home state is a fiscal mess. it is a fiscal mess because of avoidance behavior that did not deal with tough debt issues and cap bar ring. we have $20 trillion of debt in

this country, and being dismissive of that and saying that that does not matter i think is a fools errand. we need to start out and do everything we can to pursue permanent, and net means we do the hard work of tax reform, and hard and difficult, but the net result can be a transformational moment for our economy, and i say let's start and move towards the aspirational things, a permanent tax code. away withld you do the interest rate deduction for income tax? >> let's be careful. one is the mortgage interest the duction, which is in our plan, and the other is net interest which we propose. i would do that in order to get the following things, real growth. people have described the blueprint as jet fuel for the

economy, so real growth, real simplicity, dealing with the complicated problem of race erosion, the tax base leaving the united states. when burger king left florida, they went to canada. these are iconic american companies and they are going not to tax havens, but our best friends, so we have to do with that within the tax reform effort, permanence. permanence is the name of the game. i am convince you leave a lot of growth on the table if you just have a temporary plan. what we don't want to do is turn the tax code into a big tax extenders so than in 10 years we are having the same discussion over and over. let's take advantage of a national inflection point and do this the right way. david: you talk about dynamic scoring. in your plan, what growth rate do break into make this work? >> there are all kinds of models

and i don't have it off the top of my head, but we are trying to give the joint committee on taxation our view of things and ask them to score it and give us feedback, so that is a very interactive process right now, but the goal is in terms of the house republican blueprint to make sure it pays for itself and pays for itself not just on a philosophical bases, and pay for itself to make sure that the code is permanent. david: thank you very much for being with us today. jonathan: coming up, we bring you resident mario draghi's news conference at 8:30 a.m. eastern. surging, themism outlook and proving. what does this man think about that? from new york, we will get the answers, hopefully. this is bloomberg. ♪

jonathan: from new york city,

you are watching "bloomberg daybreak." let's get you up to speed. futures up 31 on the dow, three points on the s&p, the tale of a earnings, amazon, microsoft, alphabet coming up. it is a tale of two central , boj everywhere else trimming forecast, the yen weaker, dollar-yen higher. .1%.uro softer, down we pulled back from that 2017 high we printed earlier. alix: deutsche bank up after earnings, now down, but off the lows of the session. it is the largest source of income for the bank, trading hurt by low volatility.

at the end of the day, european banks are totally subject to what happens with the bund curve. that is all about the ecb. , ourscuss the outlook guests join us now. we have seen european greg start banks start to- outperform, was this steeper hawkish ecb story or an underlying growth story? >> i think both. , there washe euro anticipation of pricing in potential for the exit strategy, but at the end of the day it is the healthy mechanism and the growth recovery and the recovery inflation, helping to remove detail risks in the credit space , where the leverage, and therefore allowing banks to

benefit from the removal of those tale risks, and this is what we call in dodge in us -- called the health and the european banks balance sheet that allows more credit creation , and therefore a loud economic recovery to be self-sustaining, and those are some of the things that are important to communicate. alix: do you like european banks? >> here, yes. alix: as a relative value play? >> yes. you are in the right part of the cycle. you are in that stage where growth momentum is self-sustaining and you want to benefit. jeff, you know the innerworkings of the building around the corner as well as anybody, ecb headquarters. the argue for higher rates, is

it penetrating the core of the ecb in any way shape or form? >> it is something that has been taken into account for a long time. theecb is well aware effect's policies are having in terms of compressing margins, but the overriding concern is the economy, and while the data is pretty good, it is inconclusive and correlation is still around 1%, wage growth is sluggish, so this is not the right time to move or even signal conclusively a move in that direction. economists are calling for a move in that direction come off the back of a better outlook. how will president draghi tread this line between keeping the statement unchanged, risk tilted sendingownside, without a and negative message that the central bank does not buy into the recovery? >> it is a good question. that the risks of

miscommunication in circumstances like this when you are trying to say nothing essentially are pretty high. he has to be positive in general on the economy am a but stressing the risks to the and he has to stress some of the mechanical things that are a concern, like wages. alix: he winds up having some doves defecting. described the risks as broadly balanced and would be ok with that. what kind of bone does he need to throw to the hawks? this is always the discussion that goes on in the governing council because there have been differences between some of the board members. today, we will see a confused needge and the will be the

, understood need, to present a solid front. jonathan: in terms of the sequencing, just to get technical, in their communication, rates stay at present are lower levels past the qe horizon. is there some capacity and the next coming months to tweak that message a little bit? from 80 tobring qe 60 because the inflation threat is gone, what is the rationale for maintaining the rate at -40 when the threat is gone? >> you are right. tried to squash that debate in the last few weeks, but if we see a stronger inflation, then this debate will come back with a vengeance later on in the year. we could find ourselves talking about sequencing once more. alix: that brings you into the

conversation. the market has such a strong reaction to going negative, so when they go to positive, what is the potential market fallout for that? >> the number one place is the euro. at the short end of the interest-rate differential, that is where the hedging flows occur thethe depot rate affects zero-to your part of the curve, so fx is where the fall let would be the largest with volatility, euro rally and a decent spike in volatility. that could be the more enduring catalyst of the reversal of a long time cycle of dollar strength and euro weakness. , theyisky assets on the reflect the volatility in the short-term but don't define the

long-term trend. in fx, they can. fx channel, the there was a heightened sensitivity to what was happening with the euro from the ecb governing council. when they dipped into negative territory in 2014, it was considered him was exclusively about addressing the fx challenge. does that sensitivities to exists at the ecb? is always a delicate dance talking about exchange rates. the likelyhat outcomes of negative rates will have come up at the g-20 commitment is you can't target help yournge rate to economy, so don't expect to find anyone admitting to that, but over the last few years, a weaker euro has certainly helped. alix: we do have a data dump in the u.s. i want to highlight the different growth stories. initial jobless claims slightly higher, but still right around

cyclical lows. the durable goods orders rising by .7%, and transportation down .2%. the story of the hard versus soft data continues. inventories lowers, down .1%. when you look at this data and the data from europe, where is the cyclical cut recovery strongest? are for sure. the momentum is on an upswing in europe. jonathan: let's talk about where the spare capacity is. >> the spare capacity is also in europe. toope needs more momentum re-normalize itself after years of underperformance. the unemployment rate we have an spare capacity in europe is still very large. alix: we are seeing the hard data looking not so great. >> here in the u.s., yes.

alix: do you see that is a material risk? >> yes. the soft data leads to hard data, but the lead is a few weeks to a couple of months. we are six full months with out a materialization of strength in the hard data, so a lot of the soft data is driven by sentiment , surveys that are more qualitative in nature, so i think q2 will be a decisive moment for u.s. growth. jonathan: this is maybe a meeting that mario draghi might want to skip. maybe that's why he is three minutes late. thank you very much. over to ecb central bank headquarters, the news conference is about to get underway. rates remain unchanged. , depot rate -40.

the communication from the ecb remains unchanged as well, reiterating rates will stay at present are lower levels past the qe horizon. is the want to know economic assessment. let's turn to the man himself, mario draghi. mr. draghi: we will now report on the outcome of today's meeting of the governing council. on our regular economic and monetary analysis, we decided to keep the ecb interest rate unchanged. we continue to expect the been to remain at present or lower levels for an extended time.

ourwell past the horizon of net asset purchases. regarding nonstandard monetary policy measures, we confirm our net asset purchase at the new monthly pace of 60 billion year euro will run until december 2017 or beyond, if necessary. at any case, until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. the net purchases will be made a long size reinvestment for mature securities purchased under the asset purchase program. our monetary policy measures the continued to preserve very favorable financial conditions that are necessary to secure a sustained convergence

of inflation rates towards levels below but close to 2% over the medium term. in the coming data sensor meeting in early march confirm that the cyclical recovery of the euro area economy is becoming increasingly solid, and that downside risks have diminished. time, underlying inflation pressures continue to remain subdued and have yet to show a convincing upward trend. moreover, the ongoing volatility and headline inflation underlines the need to look through transient developments cp inflation, which have no

implication for the medium-term outlook for price stability. a very substantial degree of monetary accommodation is still needed for underlying inflation up and supportve headline inflation in the medium-term. if the outlook becomes less favorable or if financial conditions he come in consistent with further progress towards sustained adjustment in the path of inflation, we stand ready to increase our asset purchase program in terms of size and or duration. explain our assessment. starting with the economic area real gdp increased by 0.5% quarter on quarter in the fourth quarter of 2016 following a growth rate of

0.4% in the third quarter. , notably survey results, bolster our confidence that the ongoing economic expansion will continue to firm and broaden. the pass-through of our monetary policy measures is supporting domestic demand and facilitates the ongoing de-leveraging process. the recovery in investment continues to benefit from very favorable financing conditions and improvements in corporate profitability. employment gains which are also benefiting from past labor market reforms are supporting real disposable income and private consumption. of aver, the signs stronger global recovery and increasing global trade suggests

that foreign demand should increasingly add to the overall resilience of the economic expansion in the euro area, however, economic growth continues to be dampened by the sluggish pace of implementation of structural reforms, in particular in markets and remaining balance sheet adjustments in a number of sectors. the euro areand growth outlook while moving towards a more balanced configuration are still tilted forhe downside and related donnelly to global factors. headline inflation has been recovering from the very low , largelyen in 2016 owing to higher energy price increases. after reaching 2% in february

hicp euro area annual inflation stood at 1.5% in march. this reflected mainly lower energy and unprocessed food price inflation, but also at decrease and services price inflation. ofking ahead on the basis current futures prices for oil, headline inflation is likely to increase in april, and thereafter to hover around current levels until the end of this year. as unutilized resources are still weighing on price formation, measures of underlying inflation remain low and are expected to rise only gradually over the medium-term. they are supported by our monetary policy measures, the

expected continuing economic recovery, and the corresponding gradual absorption of slack. analysiso the monetary , broad money in three continues to expand at a robust pace with an annual rate of growth of 4.7% infebruary 2017 after 4.8% january. as in previous months, annual supported bywas its most liquid components with rrow -- and expanding at 8.4% in february 2017, unchanged from the previous month. the recovery in loan growth to the private sector observed since the beginning of 2014 is proceeding.

of loansl growth rate to nonfinancial corporations inclined to 2% in february 2017 month,3% in the previous while the annual growth rate of households remained broadly stable at 2.3% in february. areae same time, the euro bank lending survey for the first quarter of 2017 indicates that the net loan demand has increased and bank lending conditions have further east across all loan categories. the pass-through of the monetary policy measures put in place continues to14 significantly support borrowing conditions for firms and households and credit flows across the euro area. , a cross check of

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 of inflation rates towards levels that are below, but close to, 2% without undue delay. reap the full benefits from our policy the policy areas much contribute much more decisively to strengthening economic growth. implementation of structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment, and those productivity and potential outward growth. regarding fiscal policies or policies come all

countries should intensify efforts towards achieving a more growth friendly composition of public finances, a full and consistent implementation of the stability growth pact and the procedureomic balance over time and across countries remains crucial to enhance the resilience of the euro area economy, and we are now at your disposal for questions. >> financial times. thank you. mr. draghi, was there any support today from members of the council to say the risks to to the look are now downside, or was that a majority view. macron secure victory, which you regard the risks to the economic outlook

balance? thank you. mr. draghi: thank you. i will answer the second question first. we actually don't do monetary policy based on likely election outcomes, but on the first question, we actually had a discussion on exactly on the balance of risks as far as growth is concerned, not inflation. that is an important distinction i want to mark. hadsome of the members who a more sanguine view on the economic situation, and others while acknowledging there have been improvements on which i will say a few words later on in the growth outlook believe that such improvements would not warrant any change in communication as far as the balance of risks are concerned.

in, the council agreed about this language that , the one i read before, that said the risks surrounding the euro area outlook was moving towards a more balanced configuration, still to the downside and relate predominately to global factors. in the previous formulation, we so the governing council agreed about this and i should say all members of the governing council agreed about this formulation, so we can actually speak of unanimity in this. reporter: as far as inflation, or risks to inflation outlook,

there were differing views. it was basically shared by everybody. reporter: let me follow up on the inflation you mentioned in january i think you gave us for criteria -- four criteria for the inflation that are needed to become better over the course of time. i would be interested in your assessment on these criteria, very german thing, mr. shoveler was critical about your monetary policy, calling it not helpful. what is your reaction on this? thank you. comment on we don't politicians statements about our monetary policy. ironic say it is pretty

to hear these comments from people who supported independence of the monetary policy. let me now say something about inflation. headline inflation decline stronger than expected in march, reflecting lower inflation rates for all main components, and underlying inflation remain subdued. the short-term outlook was revised down due to lower oil prices and a weaker starting point for underlying inflation. indicators of pipeline pressures showed tentative signs of buildup of producer prices and upwards pressure at the early stages of the pricing chain. growth has been picking up slightly from a very subdued level, yet the out look for wage growth remains uncertain.

expectations,d well, we can talk about market based expectations, so in terms of my criteria, the assessment has not really changed the criteria are basically that the inflation should converge towards our aim of an inflation rate of below but close to 2%, it should be a durable convergence, so not essentially produced by trading factors like we have seen in the headline inflation recently. it should be self sustained. the present inflation path is predicated on maintaining the strong monetary accommodation in it means it will stay strongern without such monetary accommodation on our side, and of course the inflation we talk about has to relate to the whole of the euro zone and not to one country only.

reporter: thank you. wall street journal. my first question was on the sequencing of the exits when it comes from qe. your statement, you reiterated the ford guidance, but at the last meeting, you seem to suggests there was room for flexibility there. is there any likelihood of a change? area wheregray interest rates could be raised after the qe has started to be wound down. my second question was on the more generally, it is six years since the ecb raised interest zone ahead of the euro crisis, a decision that was criticized.

, you were focusing closely on inflation and seem to criticizedsequently missing the broad economic situation. today, you are once again focused on inflation. even as the economy picks up, how much is the risk that a summer policy could be repeated? i'm not sure i get the logic of the second question, but i will try to answer it anyway. on the first question, the sequencing, i don't think there is any need to discuss this now. any sufficientn evidence to alter our assessment about the inflation outlook, and we are not sufficiently confident that inflation will converge to levels consistent with our inflation and in a durable and self-sustaining today'sso from standpoint, there is no reason

to deviate from the indications we have been consistently providing in the introductory statement to this press conference, but let me just speechwhat i said in the , the ecb watchers conference. council deems the current stands fully appropriate and confirmed that its last meeting that net asset purchases will continue until december 2017 or beyond. this implies our various policies are chained together in such a way that the ford guidance apply to our asset purchase program, which is time dependent extends to our interest rate policy, so our forward guidance is on the entire package, not any specific component of it, and this guidance relates not just to the weditions under which

maintained a sustained adjustment in the path of inflation, but also the sequence of measures we would use to do so. so, from today's perspective, the negative rates in conjunction with the other elements of our easing package have turned out to be powerful in terms of easing financial conditions, and the potential negative side effects have so far been limited. we can discuss this later. so the current wording on ford guidance reflects exactly this assessment of side effects, and from today's standpoint, i don't any deviation from the indications we have been consistently providing. question, the logic -- oh, yes, well, i will slightly rephrase it. 2011e expense we had in going to be repeated today? actually, i think it is the other way around.

forget, but we had a high rate of inflation for .everal months above 2% now we are not having a high rate of inflation above 2%. we have a very subdued underlying inflation rate and volatile headline inflation led by prices. the substitution is different. reporter: thank you. if i got it right, there is one sentence missing in the statement, no signs of a convincing upward trend in inflation. what is the reason? there is one sentence less, but this one is there and page two, the outgoing

volatility inflation headlines need to convince an upward trend, the end of page one, the beginning of page two. reporter: what was your sense of the underlying inflation question? mr. draghi: the balance of risk sentence which repeated twice risks remain to the downside, and it is only once on the second page. what is the governing of the fundmate rate at the moment? mr. draghi: we don't have an estimate. on ase our estimates variety of indicators, so in ofs sense we avoid the trap being linked to a precise number

which depends on a variety of factors, and we use a wide range of indicators to inspire and inform policymaking. reporter: hello, mr. president. you were talking about the fact that risks are moving towards being more broadly balanced. thehat supposed to signal slow beginning of a more substantial policy shift? feel about the consensus view that june might be a good moment to reassess the ford guidance? my second question is that in the past two days, have you talked about how you might fromually tackle an exit stimulus and how you might fromnicate that, the exit stimulus and how you will communicate that.

mr. draghi: we have not discussed either today, but it is true that growth is improving. things are getting better, and 2013, we weren speaking of a recovery which was fragile and uneven, and now it .s solid let me give you a few numbers. .4%he growth has averaged quarter after quarter since 2015. important point is also that this recovery has broadened, which was not the case before. i have hintednk at that or explain that, we have a dispersion index of value added growth showing how value-added growth is in different countries come and now

it is that a historic minimum, the same level as 1997. the pmi is the highest since 2011, so is the economic sentiment index, the unemployment rate is at the lowest since may 2009, though it is still 9.5%, and this may tell something about the need to do structural reform because there is no doubt that some of this unemployment is structural and not cyclical. and the employment figure is even more impressive. area employment increased by almost 5 million jobs over the last 3.5 years, offsetting virtually all of the employment losses seen over the crisis period. incidentally, the employment creation should benefit the so this is aolds,

response to those criticizing our asset purchase program of increasing inequality. there is no better measure to improve inequality than increasing employment. in fact, consumption, which is the primary driver of this an increase led by in disposable income, let not so much by wage increases, but employment gains. the risks of deflation have virtually disappeared. market inflation, market-based inflation expectations, they had been increasing until february, then declined, and now they seem to be there. they do reflect an underlying behavior of the inflation risk premium which in turn reflects mostly developed outside the euro zone, the united states,

and some political uncertainty everywhere, however, the survey-based measures suggest long-term inflation projections have remained accurate. also financial conditions and credit demand are going well. if you think the growth rate of credit has increased by five percentage points going from negative to positive by the way in the last 3-4 years. also, one of the symptoms of fragmentation which was a difference in loan rates, funding rates for banks and lending rates, now has disappeared. basically the spreads due by and large reflect different risk situations, risk premium. , even leverage to some extent has decreased, especially in the private sector

nfche the improvements have been continuing and broadening. but we still have many fragility's. one of which, speaking of leverage, is the fragility in the banking sector. and the stocks in many countries that could have a higher rate of growth if it had not been for the npl. i'm sorry? we haven't discussed that. i got answered that at the beginning. -- i thought i answered that at the beginning. >> thank you. discussed today to change the forward guidance that rates remain at present lower levels? and was there a broad majority

to keep it as it is? my second question, the ecb has some track record of raising rates to early. history, for example, in 2008 or 2011. and that is also the experience of the taper tantrum in the u.s. how much -- to what extent does ?hat play a role how does that affect your policies today? this experience? thank you. draghi: well, the answer to the second question is -- no. it doesn't affect. in ouryoung enough mental process that we can make a difference between facts, assessments and history.

we judge and take our decisions based on the facts and on the analysis of the outlook. on the other point, we didn't discuss it. we didn't discuss it. actually, the discussion focused really on the balance of risk concerning gross, not inflation. so your question is related to what we call easing bias. both the lower and the other. easing bias is actually linked to inflation. in other words, the easing biases are meant to cope with risks concerning the inflation rate. not gross, directly. it is quite clear that as growth perspectives improve, certainly, the probability of the risks may go down.

but we are not there yet. thank you. good afternoon. to be clear. there were no discussions about raising the deposit rates at the meeting over the last two days? ok. , there is a growing expectation that this could bring a more meaningful improvement to the conditions as we saw last year. was that discussed? was their input on that? draghi: securities lending? we didn't discuss this. we have to recognize that it is a decentralized thing carried out by different national

central banks. not at the ecb level. thank you. reporter: there is a mention of global factors and a while ago, you mentioned the united states. there was considerable uncertainty about the policies of the trump administration. you have just come back from washington where, no doubt, you did have contact with members of the administration. did you get any further clarity on that, from your meetings in washington? mario draghi: well, not really. we are -- it would be -- i think the main conclusion is that it

reactbe premature to to or make a policy decision based pursued by policy the u.s. administration at this point in time. that one thing, perhaps, that one has to be very tentative in this. one thing that may have come out of the meetings is that perhaps, the risk of protection, trade protection, it may have somewhat receded. that marketsint is are in the course of a reassessment of the u.s. fiscal policy. frankly, i wouldn't feel

like going beyond that. reporter: thank you. thejust mentioned disparagement index on growth, which has improved. he also said there was some discussion in the council today value economic growth in the euro area. particular, in italy, gdp growth is lagging behind. maybe even so that a tightening of monetary policy could come too soon. so my question is, when deciding on a degree of monetary policy accommodations in the coming months, do you only look at

averages? of growth? or out at individual countries? mario draghi: you answered yourself. we look at averages. our mandate is not expressed in any individual country. by the way, growth is not part of the mandate. our mandate is price ability and it is expressed in terms over the rate of inflation for the whole of the eurozone. reporter: the european commission at international monetary fund are talking clearly about the end of convergence in the eurozone. do you fear that this strength the euro for the european citizens in the periphery, in the countries where coverages have disappeared? well, the euro, at

least according to the latest barometer estimates, remains pretty high. 70% across the euro area and more than 50% in old countries. each and every one. measure,ing to this the support for the euro is still strong. the social uneasiness would be a mistake. i think the imf and the european commission are quite right about being aware and alert about this. that clear now globalization had extraordinary benefits but also created losers that were not taken into account for several years. and that were not considered.

now, the commission, especially, backtrack, doesn't from the benefits of globalization. that would not be the right way to go. it should have a much greater social consideration for the ones who don't gain. or are harmed by the globalization. i like to touch on the point you have been repeating for many years -- the fact that you are constantly asked by member states to help your policy by reforms and structural reforms and so on. even the fact that unfortunately, we don't really see any of this, and looking at the criteria you have outlined, how confident is the ecb council to reach the criteria, if there is a continuation in the lack of

support from the political side? are in a even that you neutral and independent position, is there any way for the ecb to trigger such political support? thank you. mario draghi: i will answer the second question -- no. have different roles and different tasks. the same structural reforms have been undertaken. the past three years. several countries in the eurozone. so the picture is not uniformly bleak. true that of recent, the pace has slowed down. now, -- i will say worldwide, it is so -- but to give an example of why this is so necessary. that we haveoblems

in the eurozone and europe is low productivity. established that -- the largesty part of the gains in productivity are obtained by the transfer of technology from the more efficient company firms to the less efficient ones. ,o not so much by innovation but mostly by transfer. in order to allow the transfer to happen, there must be a business environment, and economic environment, which is conducive to produce such a transfer. and that is where the structural reforms come in useful. to create this environment where this transfer could happen and therefore, productivity could increase with a corresponding increase in wages.

thatly, it is quite clear once a country enters into an important political election cycle, the push for legislation or in structural reforms becomes less vigorous. this by itself doesn't justify any absence of action, because even without legislation, you have implementation of previous legislative reforms. and frankly, it it is a common assessment that in some countries, it has a lot to do in terms of implementation. even without thinking about new legislation. , although aware that the political conditions are ecb, for legislating the it continues to renew the appeal, the plea, to undertake such reforms.

reporter: you listed a lot of factors that are important for your monetary policy decisions. and i was wondering how important is the political uncertainty and risk for your assessment of that? you mentioned that you don't do monetary policy on the outcome of elections. so i was wondering about that. mario draghi: we don't do monetary policy on the likely outcomes of elections. but he see, of course we asked ourselves how much does political uncertainty -- we asked how political uncertainty can affect monetary policy decisions. we do ask ourselves these questions. extent answer is, to the , and only to the extent, that we don't react to political uncertainty by itself. we certainly internalize the

information. it may affect the medium-term outlook for price ability. so to the extent of the political uncertainty having this effect, we analyze this information along with other information, in taking our monetary policy decisions. reporter: new york times. mario draghi, i want to correct quebec to the phrase you added about the risks related, the downside risks related to global factors? is that the political risk you just mentioned? is it north korea or u.s. tax policy? that is my question. you. mario draghi: well, it is a

broad category -- first of all, we have two sets of risks. one is linked to global factors and the other one is more domestic. one interesting fact is that over the last few months, the balance between these two risks has slightly changed in the sense that the domestic source of risks have diminished and global -- geo global sources of risks have increased. and some of them are exactly the ones that you exemplified a moment ago. others, for example, they have to do with how the u.k. economy will be doing post-brexit. fact,ays assumed that, in we shouldn't think that it is over. , theurse, the consequences trade linkages, they are there. they are there and they are going to be a source of a

channel of economic consequences coming from this. of course, the final outcome will depend on the shape of the final negotiation, how long it bel take -- but it will clear that the uncertainty about shape ish and the reducing economic consequences so that is another source. but the other factors are really what you exemplified the before. and add to this, it is also -- negative surprises in some emerging market economies. that is also a source. and we shouldn't forget at early 2016, we had big worries about what was happening in china. the situation has improved but uncertainties remain.

reporter: my compliments. because all of the political the related questions, you never mention france in the answer, so let me try again. in 10 days we have a final duel between the candidates. an x bank or and marine le pen pledging to leave the eurozone. , howt want to ask theortable is -- with situation and even if it was assessed during the discussion, the possible outcome of the vote? the it play a role in overall assessment of the situation? regarding the risks? -- maybe, a second question on page one, when the statement says that the downside risks are

further diminished, it just relates to the present situation of the economy. and then the risk is tilted to it is for the- future. so the outlook. is this the difference between the present and the future? because for me, it is not really clear. the answer to the first question, i have answered before. but i will summarize by saying that in the governing council meetings, we discussed policies, not politics. the second point, it is together. "since our meeting in march, our recovering of the economy is becoming increasingly solid.

so it is a process in evolution. the downside risks have further diminished. so it takes stock of downside risks. so far, they have diminished. recovery isical becoming solid. data, itfrom survey could continue. >> we have the final question. reporter: today's governing council meeting. sorry. no. i have my own headline. but from yesterday and today's discussion from that meeting, the second question -- i need to go back to the sequencing

element. during the ecb watchers conference, i had the impression that you were quite adamant about the sequencing issue, that before any rate will move, he will enter as a purchase program but today sounds different. perhaps not? if so, perhaps you could elaborate? and the headline first. >> the headline is this. we are moving towards a more balanced configuration. and we are still tilted to the downside as it is related to global factors. [laughter] that is the headline. you work it out. on the second point, i wanted to reread the speech of the watchers conference to make sure that there is no difference. >> [indiscernible] that is what it

says and set is with the introductory statement says. jonathan: that wraps up the ecb news conference in frankfurt. let's get to the fx market reaction. the story captured in an intraday chart of the euro-dollar. mario draghi talking up gross, -- talking up gross. talking down inflation. the assessment on 4 core has notn criteria changed. it must be durable, not transient, self sustained and it must be for the whole of the eurozone. the euro-dollar on the session now is softer by .25%. -- i want tow is

start with you. you listened to the whole news conference. what did you learn? strike theyged to perfect balance. everything is fine, that is where we downplay the risk to growth. and that the risks that we see are global. they are not domestic, they are global. and here is where the dovish element comes in -- the beingion story is also thrown in with cautionary elements. inflation downside risks are still there. and also, it continues to celebrate the contribution of monetary policy. he kept on mentioning about long growth and the transmission channels of monetary policy being active again. interestingly, the other dovish element in my mind -- he said if financial conditions

were to prove inconsistent with theinflation mandate, balance of risks on inflation, we stand ready to act again with increasing bite. what does that mean? too means the euro rising much more bond yields rising too much. so they are immediately putting out this element of dovishness down the road. i do want to turn this over. the economic assessment of the ecb is still tilted to the downside as far as their assessment. is that too to global factors? is that assessment justified? iswhat you are dealing with a rules-based bank with 18 different national shareholders. and that is a really important factor in how they go about processing their information. they're going to wait. the governing council is going to look at the new updated

forecast available in june. the official forecast. so now, what you are seeing is the president marking time and really playing up some of the -- playing up many of the same cards he has played up. i don't think there is anything new in this. alix: for an investor who has been buying european stocks and because of the recovery, do they need to rethink that if we hear mario draghi pounding the table on the lack of inflation? and because they see global growth issues? contrary.he i think that means monetary policy will remain accommodative. we can soon -- we can see through the lens of what companies are saying about how they are doing their own research but we are in a process of slow and gradual recovery. and it is spotty in europe. it is much stronger in northern europe and the area of most concern remains italy. jonathan: is this and other excuse for the by europe crowd

to buy europe? that the ecb is not going anywhere anytime soon? >> political risk has declined materially. in the last week or so. and that excuse for not looking at your is off the table. but there has been steady buying in europe by domestic investors for much of this year. and as profits come through, that is really becoming increasingly important. risene the valuation has so we do need the profits. alix: i asked earlier about convergence. convergence with the theme and now divergence is the theme for the rest of the year. how do you rethink how you play that? it this way. the fed is ahead of everyone else in terms of where they are in their tightening cycle. onthe focus is increasingly what they do with their balance sheet. or what they say or think they

want to do with their balance sheet. transition to monetary conditions. it will be more about quantity from here. jonathan: the ecb is going nowhere. long european risk assets? >> long european risk assets. jonathan: always good to have you here. the opening bell is coming up next on "bloomberg daybreak." firmer.are up on the dow. ahead of a big day for earnings. the s&p 500 futures are up around four points. from new york city and our viewers worldwide, this is bloomberg. ♪ [ beep ]

show me top new artist. [ applause ] [ laughing ] show me top male artist. my whole belieber fan group... it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments

simply by using your voice. and thank you so much. the billboard music awards. sunday, may 21st. 8, 7 central. only on abc. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. jonathan: from new york city to our viewers worldwide, you are watching "bloomberg a break." futures are as follows. we will go through the earnings

in just a moment. s&p effect chairs -- s&p futures are positive. the story elsewhere, a story of two central banks. a weaker japanese yen the boj trims inflation forecast. thethe euro as well as president talks up inflation. a marginally stronger dollar. treasuries are on and off with the margin. let's get the markets open 15 seconds in. alix: moderate trading to the upside. the doubt up by 15 points. the s&p 500 about 10 points away from their intraday record. a huge earnings day. we have 65 companies reporting today. and that feels to me what will be the huge driver. we have eco-data coming out at 8:30, initial jobless claims are a little bit light overall, really great.

the march number was a little bit light although the shipments number came in and the highest since the third quarter of 2014. so how the stock revises itself will be in question. by 5%, it was up 12% in premarket. the first ever quarterly loss since going public but the loss was not as bad as was expected. with earnings up year on year but it had recall costs and sales are slowing but the average price per vehicle rose nearly $2000. bristol-myers getting a pop of 3%. key cancer drug sales were higher than estimated. they raised the full-year outlook. ups is softer on the session. revenues did rise. the more they shift from e-commerce to consumers, the more they have to bear the higher cost. it is cheaper for them to ship to businesses.

all morning, we talk about ecb earnings and the trump tax plan and how the market interprets that. these two lines -- the white line are the companies that have a high tax rate versus the s&p. the blue line is the russell 2000 of small caps which of their he would benefit from a domestic tax cut versus the s&p. both the high tax companies are outperforming after the election and then, coming off significantly as we got into a confusing zone. we do still wind up seeing the high tax companies going nowhere. catching a little bit of a bid. bank of america just say now that they prefer large and mid-caps over small caps as the trump trade might begin to fade. that is the question as we go into the specifics. jonathan: that stood out for me yesterday. the 10 year went to nowhere off the back of the tax plan.

that was the story for me. the 10 year treasury was unmoved. it was well flagged but does this implementation risk -- there is an implementation risk around it. the latter, is that something you think about as well? significant doubts about their ability to get it through? i think that is right. the whole health care business talk people that what the white house says and what congress wants to do are not necessarily going to be the same ring. and rightly. corporations -- if you look at what corporations are doing, they are not investing in the united states that heavily now. you are optimistic when survey them, but they said they want to see the details. once we see the details, we will get on with it. the thing that is a positive story is the gradual deregulation story. it is less genetic than what is

on the floor of the house. be used to get businessman out -- --athan: i want to turn to quickly. >> we have seen this as the main theme of all year. it was an unwinding of the q4 dynamics. the unwinding of the expectation prayed. mostly, disappointment. mostly in fx and rates. in equities, you really have to go down to the sector compositions and the analysis of potential beneficial's versus not, from a different tax plan. but equities and risk assets have continued to do well because they were already doing fine. , iathan: ewen cameron watt want to do deeper. you sit with the folks at black rock and you put together a

portfolio. you have to look at this sector by sector and company by company. if you want to take the 20,000 feet view, less regulation over time is certainly going to encourage businesspeople to spend more money, in terms of expanding their business. and that is what the president has promised. the delivery, we are waiting on just as we are waiting on others. but if you think about the likely out of range of outcomes, they are skewed to the positive. alix: here is the problem with that analysis. we have been companies issuing debt for years at low rates. they were not waiting for any of from taxes ory overseas. the worry is that they won't do that this time around. what gives you that confidence? ewen: a great points that you raise about the debt market. funds raised through the death market in this economic cycle, theyou deduct from that

dividends, the net rate is flat. and right now, that includes a lot of refunding and refinancing of extending the finance sheet. the next cycle will be helped if -- this is the if -- companies buy back their shares and don't increase the dividend so far and use the free cash flow proportionally on the business. that is the shoe that is waiting to drop. alix: and if i win the lottery, i could buy the brownstone that i wanted. theing that up as early on week, it was that that if they repatriate money, they could buy dividends and ipaqs. do we need to make a clause so that it goes into? you can take many coming across the border and make it look like it is going to cap x expenditures.

but there is no way you would have done that with some of the money you have already done on shore. this is what we learned when we went through this round. so the bottom line, in my opinion, the old corporate tax reform plan has to happen in its entirety. what i mean is that if you stimulus,e fiscal through investment spending and things like that, then you are creating the need for borrowing and by the private sector, you address some of the leveraging issues in the economy and you give a reason to do real cap x. one thing we are underestimating through these expectations is not just the disappointed on that as the fed raises rates and lending standards are being tightened, is his go policy doesn't come, the economy will rollover. so if this is delayed further, and what it looks like now as a

funny discrepancy in our data will turn out to be the real cannon in the coal mine. we will have yet another disappointing recovery if we don't get fiscal spending. not sure any capitalist economy should be going down the road of how they allocate capital. is other point i would raise the idea of buying back stocks and dividends is just bad. it isn't dead money, is it? it will circle it around the u.s. economy, to some extent? ewen: it isn't a dead money but it shows that companies can't find better things to do with the money. is structures that are skewed for the ceos but it is about relative opportunities. as we look at this over this cycle. they haven't spent the money on the businesses this year.

alix: what do think that will be? thinks alessio de longis it is fiscal stimulus. do you agree? will workal stimulus once the shape is clear. it should be abundantly clear to people that if you really cott corporation tax rates and you create -- if you really cott corporation tax rates at a time when profits are high, in a sense, you need a next her fuel in the tank. and supply-side economics has been around long enough. alix: before you go, i want to -- how dof your takes you do this when you have the uncertainty and you are investing in hope? value has lagged a lot recently. and it really does look quite oversold at this stage. and i think that is a better

strategy than just chasing the top 5-10 names which are increasingly expensive. but there is a sustainability that the fed. we have been looking at the health care sector, for example. we like the technology but value is where it plays for indie the big leg up in the market? alessio: we agree with that, as well as the need for doing global locations, in the u.s., we like that angle but otherwise, we see better opportunities outside of the u.s. jonathan: alessio de longis, we appreciate your time and ewen cameron watt, in london. 11 minutes into the session, let's get you up to speed. the futures worked at flat. the dow up six points. the s&p 500 going nowhere. the big earnings we coming from amazon, alphabet after the bell.

we count you down with a tech preview coming up next. this is bloomberg. ♪

emma: this is "bloomberg daybreak." coming up tomorrow, alan greenspan joins us from 7:00 a.m. this is bloomberg. ♪ in the markets, you have equities flat on the day but two standouts -- amazon and google trading around record highs. they're posting first-quarter results after the market today. what are the expectations about? joining us is brian fitzgerald. a buy on both stocks.

want to start with you. let's start with amazon. what do you see from them today that likes you pushing the stock higher? good morning. we expect amazon to have great results tonight. it is driven by the strength in a couple of things. one is the ability to drive fulfillment. that is what consumers go to when they shop online. alix: some of the risks that people appointed out is the operating income, it to expects -- operating income. -- s brian: we don't mind a headwind. india, the cloud services and the fulfillment infrastructure and digital content and growing their market share there. pivot there to

the web service. we have had competition in that and they have cut races. solid margin story not as as brian thinks it has to be? >> it is solid. the cost has been going down with the scale. if you look at the estimates, they have come down after the last earnings to account for the price that will be announced. so i don't think the issue there is the margin. the mid -- the margins should be sustainable. bloombergon the today, the consensus price performanceterrific so far. when you try to sell the idea of buying amazon, how well does that go down? how do you find the edge when you have a cut -- when you have a company that is so well researched? think the investment thesis is in tact. i think there is a lot of runway

in terms of growth for e-commerce. it is high single-digit's penetrated. gross aroundthe aws, it is a $17 billion business. rowing 45%. margins much higher than the core business. they are far ahead of the competitors in terms of the services they ruled out. when you look at the amount of products that they offer, besides storage and compute, they have a lot of pricing elasticity around the 200 additional products they offer in the aws suite of products. alix: google sitting at a record. a big scandal over the first quarter, the boycott over you to advertisers. does that ring true in the first quarter or does it hurt them in the second quarter? jitendra: if you look at the expectations, the estimated impact would be around 1%. investors will look at some validation of that estimate. it should be minimal and hopefully it is temporary and the steps they have taken to fix it will resolve it.

cloud growth will be key for if youas well, because look at the other revenue, growth has accelerated and the expectations are to match amazon by 2022. so cloud will be a big focus this earnings season. alix: when you take a look at a , what is theogle risk that they miss? where is the dicey part? xian: we are at 19 times cash. we think there is a lot of discipline in built into the model by ruth pratt. if you look at the things they are doing around buybacks, a $7 million buyback, rationalizing the alphabet and doubling down on the ones that make sense to the core mission statement at google. and that hasn't changed since they went public in 2004.

to take the world information and make it useful. tremendous work with the numbers -- the strategy of individual companies. [indiscernible] 5502han: the move from 6000 points on the nasdaq -- five companies. there is a blanket buy theme in tech. what is driving things from 30,000 feet? brian: what you are seeing out isthe blue chip tech stories that they continue to leverage things like cloud computing. things like ubiquitous and cheap data. and if you can bring those forces to bear, you can lever models, anywhere from delivering

information and search to delivering better and more timely goods via amazon. so i think it is really the fact that we have big tech companies leveraging these assets that are ubiquitous and are cheap. and they are doing this in a smart way. they are utilizing machine learning and artificial intelligence. alix: thank you very much. brian fitzgerald and jitendra waral. to your point, every portfolio manager we have on says they like tech. jonathan: they didn't like that at the beginning of november. alix: if you have a bloomberg terminal, check us out on tv . you can click here, "ask a guest a question" and we can do so in a segment. this is bloomberg. ♪

david: this is bloomberg. saturday will mark trump's first 100 days in office. a contract tod the american voter and one of the commitments he made was to put before congress and fight for enactment of a middle-class tax relief and supplication act. the question now is whether what he did yesterday at the white house meets that commitment. joining us now to answer that question is marty schenker. did he fulfill his promise on that one? more -- it isn't an act, it is more of a wish list. no, he didn't fulfill his promise but i don't think the american people care. and certainly, donald trump is ,

-- david: behind closed doors? marty: this is a most unconventional president. and you are getting an unconventional way of governing. people in washington, both the press and the government itself are having a hard time getting their head around this is the way that trump operates. have had a lot of people say this is not the way it operates in capitol hill but a lot of people have said they don't like the way things are working so let's try something else. and he is being disruptive to the normal process. thisly a tax bill with kind of sweet would have legislative language behind it. we don't even know where that will begin. we don't know when the white house will drop the bill or if it will be paul ryan. i haven't even started the process. -- they haven't even started the process. david: as important as what is itthe bill is how long

will take. on the bloomberg, it talks about the need for permanent tax structure in order for people to make investment decisions. marty: one of the issues with a tax inversion about people domicile and overseas. bringing jobs back. no company is going to make any change in that policy if it is only a 2-3-year tax change. so permanency for companies is essential. and if it is not permanent, it is not going to work. david: in order to be permanent, it has to be revenue neutral. marty: yes. and no one knows how they will make this tax plan work. if it isn't revenue neutral, it will not be permanent. david: doing dissents of what growth rate we have to have in order to make this dynamic scoring pencil it out to make it neutral? most of the economists and tax experts say that even a

3% tax rate won't be enough to fund the $7 trillion revenue loss that this bill or this proposal might generate. so it is unclear how that is going to work. word ofnclear is the the day. alix: kkr is having breaking news. stake -- in kkr. worth about $750 million and they own it through derivatives. reported aas kkr killer quarter. the game came from the first data. one of the biggest balance sheet holdings, 9.2% in the first quarter. big news in multiple fronts. that stock is up the highest level since november 2015. reallyn: i get to work early and there are only two people there. one of them is alix steel.

i usually make a sound that is like good morning. this is cake time for alix steel. eat the cake at 1:00 p.m. today. happy birthday. alix: that is amazing. i'm actually going to eat this, this time. a special birthday wish for alix steel and to our producer, as well. that does it for us. the coverage continues. this is bloomberg. ♪

vonnie: from new york, i'm vonnie quinn. mark: i'm mark barton. welcome to bloomberg markets. ♪

vonnie: we will take you from new york to london this hour and cover stories out of washington and frankfurt. first we have some breaking economic data. pending home sales for march down .8%, not as much of a drop as economists were forecasting. pending home sales once again down month over month .8%. year-over-year it was actually a gain of .5%. not much market reaction from that. the 10 year yield at 2.31%. major indices are relatively flat. the nasdaq is up .3%. the: